When GT Advanced filed for Chapter 11 bankruptcy earlier this month, COO Daniel Squiller included a sealed affidavit with details on GT Advanced's relationship with Apple. The document was not made public due to non-disclosure agreements between the two companies. Any breach of this agreement would cost GT $50 million for each violation.
After weeks of discussion about what details should be made public, GT Advanced filed a revised declaration that explains what happened to the deal between the two companies, reports Fortune. In summary, the production of mass quantities of sapphire was too costly and not fast enough to meet the manufacturing goals agreed upon by the two companies. Squiller summarizes:
The key to making the transaction profitable for both sides was the production of a sufficient number of 262kg boules of sapphire crystal meeting the specifications required by Apple. GTAT has sold over 500 sapphire furnaces to Asian customers that produce 115kg boules. Most sapphire manufacturers using non-GTAT furnaces produce boules of less than 100kg in size. Production of sapphire at 262kg would provide for scale, that if accomplished, would be profitable to both Apple and GTAT. Unfortunately, the production of 262kg boules of sapphire could not be accomplished within the time frames the parties had agreed, and was more expensive than anticipated. These problems and difficulties resulted in a liquidity crisis at GTAT, which led to the commencement of these chapter 11 cases."
Additional details in the document suggest the deal favored Apple, while putting GT Advanced at risk with Squiller providing 20 examples of this disparity. Examples include a clause that requires GT to produce millions of units of sapphire that Apple was not contractually required to buy and a delivery guarantee that forced GT to purchase and ship sapphire from third-parties if it can't fulfill Apple's purchase orders using its own supply of the material.
These examples only address a few of GT's complaints. Fortune lists all 20 claims along with other details about GT's sudden and unexpected bankruptcy filing.