Apple slaps suppliers with a $50 million fine for leaking secrets

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Photo: Michelangelo Carrieri/Flickr
Photo: Michelangelo Carrieri/Flickr

Apple’s bankrupt sapphire supplier GT Advanced Technologies might have stayed quiet about its reasons for the bankruptcy, but a few details are nonetheless starting to emerge.

Two of the most intriguing tidbits concerning the case regard the cost of sapphire production for GT Advanced Technologies, and the financial penalties Apple imposes on any supplier who leaks information about future products.

As per the Financial Times, GT Advanced Technologies claims its sapphire manufacturing facility in Mesa, Arizona, costs $1 million per day to run. It is for this reason that the company plans to shutter the plant by December 31, resulting in the loss of 890 jobs.

In terms of Apple’s heavy fines, it is reported that as part of the deal the supplier signed with Apple, GT had to agree to pay $50 million per breach of its “confidentiality obligations.”

Recently Apple has been trying to crack down on leaks in its supply chain. Earlier this year it was reported that Apple had enlisted the help of 200 security officers in China to catch anyone selling accessories, such as cases or schematics, to people in the media.

Of course, a supplier working with Apple shouldn’t be leaking information to begin with, but GT Advanced’s lawyers are likely trying to use information like this to bolster their case that Apple was an an “oppressive” company whose “contractual demands for secrecy” give it “disproportionate power” over suppliers, while also creating “significant logistical problems.”

Apple has reportedly turned to two other non-U.S. suppliers to provide the sapphire for its smartwatches (and perhaps future-generation iPhones.)