GT Advanced
Latest
Remember the GT Advanced sapphire facility? It's going to be a command center for Apple
CNBC reported today that the GT Advanced plant in Mesa, Arizona, originally tasked with the job of making sapphire for screens, buttons, and other bits and pieces of Apple gear, is now going to be taken over by the company that allegedly caused GT Advanced to go out of business -- Apple. Apple will be spending a cool US$2 billion to transform the factory into a data center that will act as a command center for the company's worldwide data network. Arizona Governor Doug Ducey took to Twitter to tout the investment and the jobs (about 150 full-time Apple employees, about 300-500 engineering and construction jobs) that will benefit the state. Ducey has had a good week, with his state playing host to Super Bowl XLIX yesterday and this announcement coming today. I'm pleased to announce #Apple is expanding to #AZ with a $2 billion investment in #Mesa. http://t.co/pfWI8pXALe #AZmeansBiz - Doug Ducey (@dougducey) February 2, 2015
Document details problems between Apple and sapphire supplier GT Advanced
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.
Apple and GT Advanced agree to part ways
Apple and sapphire supplier GT Advanced Technologies have reached an agreement that severs the ties between the two companies. GT Advanced's lawyer Luc Despins told a bankruptcy court that the two companies have agreed to an "amicable parting of the ways." Under the agreement, GT Advanced would reveal additional details about its bankruptcy, but Apple's contracts with GT would remain sealed and other documents between the two companies would be destroyed. GT Advanced also will be allowed to sell the sapphire furnaces and other assets in its Mesa, Arizona sapphire facility to satisfy its debt. The final amount Apple will receive as part of this settlement was not disclosed. The assistant attorney general of New Hampshire and other lawyers reportedly scoffed at the secrecy clause of the agreement, arguing that creditors and laid off workers have the right to know what happened to the company. According to a report in Reuters, GT Advanced's bankruptcy centers on the November 2013 agreement it signed with Apple to provide sapphire screen displays for the company's future mobile devices. The settlement is subject to approval by Judge Henry Boroff, who earlier approved GT Advanced's plan to close its sapphire facility. A court approval hearing is scheduled for November.
Apple was surprised by GT Advanced bankruptcy
Apple was caught off-guard by GT Advanced Technologies' announcement that they plan to file for Chapter 11 bankruptcy, according to a report published today in Reuters. In the iPhone maker's first public response, it said it was working with Arizona officials on its next moves. "We are focused on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps," spokesman Chris Gaither said. According to the Wall Street Journal, GT Advanced Technologies ran into financial trouble when Apple opted not to pay the company a $139 million loan installment it had coming in October. Under the terms of Apple's contract with GT Advanced Technologies, installment payments would only be doled out when certain operational and quality control metrics were met. That said, specific details regarding what type of milestones GT Advanced missed, at this point, remain unclear.
Apple's sapphire supplier GT Advanced Technologies files for bankruptcy
GT Advanced Technologies, the company Apple tapped to manufacture large quantities of sapphire, filed for Chapter 11 bankruptcy earlier today. Over the past year, Apple helped GT Advanced orchestrate the build-out of a brand new sapphire manufacturing facility in Arizona, even providing GT Advanced with a few substantive loans to help them acquire the requisite machinery. Further, regulatory filings throughout the year indicated that GT Advanced had plans to manufacture huge quantities of sapphire, leading some to speculate that the iPhone 6 would feature a sapphire coated display. The iPhone 6 unveiling, however, came and went with nary a mention of sapphire. While the Watch will use sapphire crystals in its two higher-end models, that product isn't due until 2015. A press release on the matter reads: GT Advanced Technologies Inc., announced today that it had, together with certain of its direct and indirect subsidiaries (collectively, GT), commenced voluntary cases under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of New Hampshire. GT expects the court will authorize the company to continue to conduct business as usual while it devotes renewed efforts to resolve its current issues and develops a reorganization plan. GT indicated that as of September 29, 2014 it had approximately $85 million of cash. In addition, it is now seeking debtor-in-possession financing, which, once obtained, would provide the company with an immediate source of additional funds. These funding sources will enable GT to satisfy the customary obligations associated with the daily operation of its business, including the timely payment of employee wages and other obligations. As a result of the filing, and as is customary with public companies, NASDAQ may temporarily halt trading in the company's stock pending the receipt of additional information on the company's financial condition. The company is cooperating with NASDAQ and will be providing any requested information as promptly as possible. The iPhone 6 still employs sapphire for the home button and the camera lens, but that's apparently not enough to give GT Advanced the amount of cash they need to run their business. As for sapphire not being used for the iPhone 6 display, there are two theories percolating through the blogosphere. One is that Apple was hoping to announce an iPhone with a sapphire display but that GT Advanced wasn't able to get yields up to a sufficient level before mass production kicked off. Another is that Apple seriously pursued the idea of a sapphire iPhone display but ultimately retreated after discovering during drop tests that it was more prone to shattering than glass. Following news of GT Advanced filing for bankruptcy, shares of the company are down by over 90% and are currently trading at about $0.90.
Apple clears final hurdle to bring sapphire-manufacturing plant to Arizona
AZCentral is reporting that the Gilbert Public School Board voted to approve a tax break for Apple, thereby clearing the way for Apple to open up its planned sapphire-manufacturing plant in Mesa, Ariz. Under terms of the agreement, Apple will buy the land, pay all expenses needed to build out the factory and then lease it back to GT Advanced, which will oversee the manufacturing operation. The fate of the high-profile deal potentially worth hundreds of jobs seemed to hang in the balance, with the school district being the last of eight governing entities needed to approve a property reclassification that would entitle the premier tech company to a tax break. News of Apple's plans to build a sapphire-manufacturing plant, in conjunction with GT Advanced, first surfaced earlier this month. Apple currently uses sapphire to protect the camera lens on the iPhone along with the the Touch ID sensor on the iPhone 5s. The scope of Apple's deal with GT Advanced, however, has led to many to wonder just what Apple might need all that extra sapphire for. As for specifics regarding the tax breaks afforded to Apple, AZ Central indicates that the Arizona Commerce Authority "offered a US$10 million grant and other incentives to Apple to bring a high-tech manufacturing plant" to Mesa. All told, Apple's foray into the sapphire-manufacturing business in Arizona will create an estimated 1,300 construction jobs along with 700 full-time manufacturing jobs.
