Apple's Sapphire Partner GT Advanced Technologies Files for Bankruptcy

GT Advanced Technolgies, Apple's partner in a sapphire production facility in Arizona, today announced that it is filing for Chapter 11 bankruptcy protection as it seeks to reorganize its businesses. The company remains positive that it will continue to be able to meet its obligations during this time of transition.

GT-logo2011-pms

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. [...]

"GT has a strong and fundamentally sound underlying business," said Tom Gutierrez, president and chief executive officer of GT. "Today's filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.

"We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses."

GT's finances have taken a significant hit as it has retooled to support its partnership with Apple, turning its focus to ramping up sapphire production for Apple rather than selling furnaces to other companies. Still, with Apple making a series of pre-payments to GT to help fund the new initiative, the circumstances surrounding the bankruptcy filing are not yet clear.

Apple had been widely expected to include sapphire display covers on at least some iPhone 6 models, but the development did not come to pass. With Apple having no commitment to purchase sapphire from GT, it is possible that an unexpected decision by Apple to omit sapphire from the device put GT into a precarious financial position. Apple is planning to use sapphire on some versions of its upcoming Apple Watch, but it is unclear whether it is indeed sourcing sapphire from GT for the product, and if so, whether the quantities involved would be enough to support GT's investments thus far in the area.

Update 7:47 AM: GT's stock, which was halted prior to the announcement, has resumed trading and is currently down 90 percent.

Top Rated Comments

abcdefg12345 Avatar
104 months ago
Get ready for a bunch of comments from people who don't understand what Chapter 11 is...

why don't u explain it then
Score: 48 Votes (Like | Disagree)
dustinsc Avatar
104 months ago
Get ready for a bunch of comments from people who don't understand what Chapter 11 is...
Score: 33 Votes (Like | Disagree)
yaxomoxay Avatar
104 months ago
why don't u explain it then
Chapter 11 is a protection, a "last resort" to STAY in business. Its aim is to calm down investors/debtors by guaranteeing that debts will be paid. Without such protection, banks/investors/vendors would stop giving credit to a company. With the protection, there is enough guarantee to keep investing $$$ in the company.

Look at it this way.
You owe $10000 to VISA because you decided to buy a maxed out Mac Pro, but you can't pay your debt this month. First thing that happens to you? Your credit line is closed, no one can help you out, your credit score is destroyed. In other words, you're financially f-ed.
Getting a "Chapter 11" bankruptcy protection means that a higher entity (court) will guarantee that VISA will get its money back one way or another. This allowes VISA itself to "extend" your debt over time, or to find other solutions that do not damage you. VISA, as your creditor, WANTS your money, it does not want to put you out of business so your business can stay alive while it "restructures". However, VISA itself it needs some level of reassurance, and that is exactly what Ch. 11 is for.
Score: 17 Votes (Like | Disagree)
Col4bin Avatar
104 months ago
So Apple basically has GT Advanced Technologies sign an exclusive agreement that they will only produce saphire for Apple's rumored iPhones and Apple Watches over the next five years at a high volume capacity, thus limiting GT's partnerships with virtually any other potential clients. Then GT suddely files for Chapter 11 bankruptcy due to not enough business continuity/cash flow.

http://investor.gtat.com/releasedetail.cfm?ReleaseID=804195

Did Apple inadvertantly screw their business partner by having them sign this exclusive contract? Should Apple at least explore a possible buyout of this company or at least license the tech?

Mixed feelings about Apple's business practices at times. :(
Score: 12 Votes (Like | Disagree)
Elijen Avatar
104 months ago
Apple, destroying businesses since 1976.
Score: 12 Votes (Like | Disagree)
itjw Avatar
104 months ago
IMO, and I have no idea if this is correct, due to Apple having GT Advaced sign the exclusive deal and gauranteeing sapphire business, Apple wasn't able to maintain their projected production volume of iPhone 6's, thus eliminating the sapphire glass from this device entirely. Since Apple wasn't placing the orders, GT Advcanced gets screwed.

(At least this is how it comes across to me.) If someone else has a better explanation, I'd love to hear it.

I think you're on to something.

My hunch is, GT bet BIG on Apple using sapphire for the 6, Apple probably told them they'd need to have production at X by May or something, and they missed the deadline.

Apple went ahead with "ion strengthened glass" (lol), and told GT that they'd still use them for other things, but not the 6.

Because GT went "all-in" they can't afford this, and have capacity out the yin-yang, but no use for it. Chapter 11.
Score: 11 Votes (Like | Disagree)

Popular Stories

apple watch ultra hammer test

YouTuber Tests Apple Watch Ultra Durability With a Hammer: Table Breaks Before the Watch

Sunday September 25, 2022 2:27 pm PDT by
A YouTuber has put Apple's claims for the durability of the Apple Watch Ultra to the test by putting it up against a drop test, a jar of nails, and repeated hits with a hammer to test the sapphire crystal protecting the display. TechRax, a channel popular for testing the durability of products, first tested the Apple Watch Ultra by dropping it from around four feet high. The Apple Watch...
tim cook spring loaded event

Six Major Products to Expect From Apple in 2023

Sunday September 25, 2022 10:57 am PDT by
As we approach the end of a busy product release season for Apple with only new iPads and Macs left to be announced over the next month or so, we're also setting our sights on 2023. Apple is rumored to have several major products in the pipeline for next year, including new Macs, a new HomePod, a VR/AR headset, and so much more. Other than new iPhones and Apple Watches, which are expected...
Tim Cook Apple Event

Gurman: New iPads and Macs May Be Announced Through Press Releases, No October Event

Sunday September 25, 2022 6:50 am PDT by
Apple may decide to release its remaining products for 2022, which include updated iPad Pro, Mac mini, and 14-inch and 16-inch MacBook Pro models, through press releases on its website rather than a digital event, according to Bloomberg's Mark Gurman. In his latest Power On newsletter, Gurman said that Apple is currently "likely to release its remaining 2022 products via press releases,...
AirPods Max 2022 Colors

Ten Things AirPods Pro 2 Tell Us About AirPods Max 2

Saturday September 24, 2022 1:00 am PDT by
Upon the release of the second-generation AirPods Pro, the AirPods Max became the oldest current-generation AirPods product still in Apple's lineup. Introducing several new features like Adaptive Transparency and the H2 chip, the second-generation AirPods Pro may provide some of the best indications yet of what to expect from the second-generation AirPods Max. Almost two years later, rumors...
iPhone 14 Pro Sports Scores Dynamic Island

iPhone 14 Pro Features Live Sports Scores in Dynamic Island on iOS 16.1

Monday September 26, 2022 7:52 am PDT by
Earlier this month, Apple announced that iOS 16.1 will enable a new Live Activities feature that allows iPhone users to stay on top of things that are happening in real time, such as a sports game or a food delivery order, right from the Lock Screen. On the iPhone 14 Pro and Pro Max, Live Activities also integrate with the Dynamic Island. Premier League match in Dynamic Island via Paul Bradford ...
General iOS 16 Feature Yellow

Some iOS 16 Users Continue to Face Unaddressed Bugs and Battery Drain Two Weeks After Launch

Monday September 26, 2022 7:34 am PDT by
Today marks exactly two weeks since Apple released iOS 16 to the public. Besides the personalized Lock Screen, major changes in Messages, and new features in Maps, the update has also seen its fair share of bugs, performance problems, battery drain, and more. After major iOS updates, it's normal for some users to report having issues with the new update, but such reports usually subside in...
iPhone 14 Pros in Hand Black Background Feature

Verizon iPhone 14 Pro Customers Reporting Cellular Connection Issues

Monday September 26, 2022 6:23 am PDT by
iPhone 14 Pro customers on the Verizon network in the U.S. are reporting issues with slow and unreliable 5G cellular connections and calls randomly dropping. Several threads on Reddit (1,2,3) and the MacRumors forums chronicle issues faced by Verizon customers and Apple's latest iPhone. According to user reports, signal strength on the iPhone 14 Pro is unreliable and weak, while other...
iphone 14 pro max deep purple

iPhone 15 'Ultra' Could Replace Pro Max Model Next Year

Sunday September 25, 2022 7:02 am PDT by
Apple is gearing up to possibly replace its "Pro Max" iPhone with an all-new "Ultra" iPhone 15 model next year, reliable Bloomberg journalist Mark Gurman said today. Writing in his latest Power On newsletter, Gurman said that for the iPhone 15, Apple is planning a revamped design alongside USB-C and a potential name change. Apple could replace its "Pro Max" branding, which it started to use...
apple watch ultra deuglify 1

Apple Watch Ultra User Mods Titanium Casing to 'Deuglify' Design

Tuesday September 27, 2022 8:05 am PDT by
An Apple Watch Ultra user has modified their new device's casing to add a brushed finish and remove the orange color of the Action Button in an effort to make it more visually appealing. The Apple Watch Ultra offers the first complete redesign of the Apple Watch since the product line's announcement in 2014, and while the design has been met with praise from many users, some have criticized...