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GT Advanced COO: Apple Told Us 'Put On Your Big Boy Pants and Accept the Agreement'
As of today, those previously sealed documents are now available for public inspection, including an unedited affidavit [PDF] from GT Advanced COO Daniel Squiller. Squiller submitted a revised affidavit on October 28, which gave some insight into the deal between Apple and GT Advanced, but the newly available unedited version expresses much stronger negative feelings towards the partnership and places more of the blame for GT's failure on Apple.
According to Squiller, Apple used a "bait-and-switch" strategy, offering GT Advanced "an onerous and massively one-sided deal" in 2013. He says that Apple initially drew GT in with the promise of a huge deal, originally agreeing to purchase sapphire furnaces and let GT operate them, but eventually demanding a "fundamentally different deal" requiring GT to purchase the furnaces itself.
The new structure, as a contract matter, shifted all economic risk to GTAT, because Apple would act as a lender and would have no obligation to purchase any sapphire furnaces, nor did it have any obligation to purchase any sapphire material produced by GTAT.GT gave into Apple's new terms because it had "invested months negotiating a sale contract with Apple while being effectively locked out of pursuing other opportunities with Apple's competitors." During "extensive and all-consuming" negotiations with Apple, GT ceased speaking to other companies about its furnaces due to the lure of Apple's large offer.
Apple reportedly told GT not to bother attempting to negotiate because it "does not negotiate with its suppliers." GT was required to agree to all of Apple's terms or risk losing the deal, and as has been previously noted, the contract was highly favorable to Apple, requiring GT to produce sapphire that Apple was not obligated to buy. Squiller alleges that when GT execs balked at the terms, Apple said "Put on your big boy pants and accept the agreement."
As Squiller previously described, the company's relationship with Apple became "unsustainable" after Apple refused to take responsibility for cost overruns and expenses that it caused due to its control over operations. Apple also reportedly selected fabrication equipment that "could not economically produce a product that Apple would accept" and then refused to permit equipment changes that would allow the company to produce an acceptable product.
Squiller accuses Apple of "embedding" itself in GT's operations so deeply that GT was forced to "divert an inordinate amount of its cash and corporate resources" into the Mesa facility, affecting GT's continued viability as a whole.
Apple, in documents asking that Squiller's affidavit remain sealed, said his statements were "untrue, irrelevant and defamatory," stating that Squiller's declaration "goes far beyond what was reasonably necessary to describe the Debtors' current financial situation and instead includes gratuitous characterizations of Apple's motives, negotiating tactics and business practices."
Apple and GT Advanced have already reached an agreement to officially end their partnership, nullifying the terms of the original deal. Under the terms, GT will repay its loans to Apple by selling off its sapphire furnaces, and it has already begun shutting down its Mesa, Arizona plant and laying off employees.