Court docs reveal how Apple treats its suppliers (badly)


GT Advanced
Back entrance to GTAT's sapphire plant in Mesa, AZ. Photo: Buster Hein/Cult of Mac
Photo: Buster Hein/Cult of Mac

Apple and its former sapphire supplier GT Advanced Technologies have stayed quiet about their disastrous relationship, but newly unsealed court documents reveal that the two companies never had a chance of making things work.

Judge Henry Boroff ordered the sealed documents to be opened on Tuesday, and one of the affidavits from GTAT CEO Daniel Squiller claims Apple used a “bait-and-switch” strategy that was massively one-sided. When GTAT balked at Apple’s terms, execs were told to stop trying to negotiate and “put on your big boy pants and accept the agreement.”

The original deal with GTAT was for Apple to purchase a number of sapphire furnaces and then have GTAT operate them. The deal was eventually changed to something “fundamentally different” and required GTAT to purchase all the furnaces and assume all the debt in a new deal that was “onerous and massively one-sided.”

GTAT says they still went through with the deal because they lost business waiting to land the big Apple contract and were barred from talk to competitors. Apple basically assumed de facto control of the sapphire plant in Arizona, even though GTAT was financially liable for it. Things eventually got so strained between the two companies that Apple had to remind its employees to not order GTAT employees around.

Apple paints its side of the story a bit differently in filings, claiming it “bent over backwards” to help GTAT get their sapphire operations running.

“Apple has paid the Debtors $439 million and additionally spent in excess of $700 million in connection with the transaction despite receiving from the Debtors sapphire that was only a small fraction of the Debtors’ original commitment. Far from the villain in these chapter 11 cases, Apple is the largest victim of the Debtors’ failure to perform under the agreements it negotiated at arms’ length and with advice of counsel.”

Apple has expressed its desire to continue working with GTAT to bring sapphire glass to its customers, but GTAT says it’s getting out of the sapphire business altogether. Rather than waste the hundreds of millions invested into the plant, Apple is looking to repurpose the Mesa factory, or have another company come in and take over.

You can read GTAT’s unsealed affidavit below:

GT Advanced COO Affidavit by rsgnl


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