Apple’s deal with sapphire supplier GT Advanced Technologies went sour just one year into the company’s agreement to build a sapphire factory in Mesa, but after a tense few weeks, the companies have reached a settlement that allows them to part ways.
As part of its ‘amicable’ separation from Apple, GTAT will be expected to pay back $439 million over the next four years without interest, by selling off over 2000 ASF sapphire growth systems it purchased for the Mesa factory.
The terms of the separation allow GTAT to be released from all exclusivity agreements it made with Apple, while also allowing GTAT to keep the intellectual property it developed in sapphire growth and fabrication technology – including the Hyperion 4 Ion Implanter technology that was expected to solve Apple’s sapphire glass problems.
GTAT says it plans to get out of sapphire production altogether and will instead focus on becoming an equipment supplier by manufacturing sapphire growth systems and processes once it emerges from Chapter 11 bankruptcy. Operations at the plant in Mesa will wind down this year and 650 employees have already been laid off, GTAT CEO Tom Gutierrez announced in a press release this morning.
“We are pleased with the settlement that we have negotiated with AppleWe realize that our filing for Chapter 11 protection has caused uncertainty and hardship for many of our important stakeholders. We have been working diligently to develop a restructuring plan that will allow us to emerge from Chapter 11 as quickly as possible and with the operating flexibility and resources to position GT for long-term success.
As for Apple’s future sapphire aspirations for the iPhone and Apple Watch, it will have to look for another supplier. GTAT and Apple say they will continue “their technical exchange involving the development of processes for growing next generation sapphire boules,” but finding someone to make them will be an all new challenge.
Source: GT Advanced Technologies
Buster Hein is a freelance writer who lives in Phoenix, Arizona. Twitter: @bst3r.
6 responses to “GTAT to pay Apple $439 million to stop supplying sapphire glass”
Still curious if this will change the release schedule for Apple Watch. Haven’t seen any confirmation of this.
The capacity that GTAT was creating was far, far beyond what Apple could need for a watch. Apple may already have an agreement with some other supplier to simply buy up some of GTAT’s furnaces to supply them with watch crystals, or perhaps they will just turn to another existing producer of sapphire watch crystals. What Apple needed the new technology and massive capacity for was creating something as large as a phone screen in high volumes, but they have apparently abandoned that plan.
What a mess. It appears Apple was fooled by promises of a better sapphire glass which GTAT couldn’t deliver. Corning was right all along. Apple could certainly afford to take the risk but production times are critical and obviously the quality of the component even more so. My guess is that Apple couldn’t stay in a contract and get no closer to resolving the problem so Apple had to bail at some point past the deadline. If Apple has any semblance of a product road map, that probably messed it up. And yet everyone automatically blamed Apple for doing dirt to a little company.
Hey, maybe some really wealthy person will buy one of these things for their mansion to make their own sapphire crystals for the fun of it. Wouldn’t that be cool for the person that has everything? Your own private Sapphire boule maker. Wow!!
Maybe they should have perfected the process before buying the equipment.
Apple motherboard $905K, I wonder how much they would get for one of these suckers from an Apple collector? Any takers?