Apple Withheld $139 Million Payment from GT Advanced Ahead of Bankruptcy Filing

by

gt_sapphire_furnaceApple withheld a final $139 million payment that it was due to make to GT Advanced, reports The Wall Street Journal, which may have contributed to the company's decision to file for Chapter 11 bankruptcy. GT also reportedly burned through cash, spending $248 million in one quarter.

That may have led to the company's filing, since its cash, at $85 million, was below a $125 million trigger point that would allow Apple to demand repayment of about $440 million in loans it had advanced. Apple had agreed to lend GT a total of $578 million to help get a large sapphire factory in Arizona up and running. The tech giant reportedly withheld the last $139 million payment it was due to make, although it isn't clear why.

What is obvious is that GT effectively bet the house on a new technology with a new business model and made itself dependent on a single customer--Apple.

Though it is not known why Apple withheld the final $139 million payment, Apple's $578 million loan to GT Advanced was subjected to certain capacity requirements that the sapphire company may not have been able to meet. According to GT Advanced's own filings, it may have had issues with poor sapphire yield rates.

Apple and GT Advanced first struck a deal in late 2013, and along with a $578 million loan for purchasing equipment, Apple also constructed a 700-employee manufacturing facility in Mesa, Arizona, which is run by GT Advanced.

While Apple was widely expected to include sapphire display covers from GT Advanced on some iPhone 6 models, that did not end up happening. Despite purchasing a facility for GT and lending it money to buy equipment, Apple was under no obligation to purchase GT's sapphire. GT was, however, subjected to "exclusivity provisions" that limited what it could sell to other companies.

Though GT Advanced has filed for Chapter 11 bankruptcy, GT Advanced's CEO promised the company would continue operations as it went though a transitional phase to reorganize its business.

GT Advanced will have its first Chapter 11 bankruptcy court hearing on Thursday, October 9 in New Hampshire, where it is expected to explain what caused its bankruptcy filing.

(Image: GT sapphire furnace)

Top Rated Comments

(View all)
Avatar
74 months ago

Synthetic sapphire, look it up.


Its called humor #
Score: 17 Votes (Like | Disagree)
Avatar
74 months ago
Mining? #### U guys #
Score: 17 Votes (Like | Disagree)
Avatar
74 months ago

sapphire is very hard to find you have pay a lot of miners to get that much quantity apple wanted.


Duh, using miners is 20th century tech. Apple is using a massive herd of repurposed truffle pigs to sniff out the sapphires... :eek:
Score: 15 Votes (Like | Disagree)
Avatar
74 months ago

Synthetic sapphire, look it up.


That's just make believe, like elves and Gremlins and Eskimos :)
Score: 12 Votes (Like | Disagree)
Avatar
74 months ago

sapphire is very hard to find you have pay a lot of miners to get that much quantity apple wanted.


I know, and it must be a bugger to find stones big enough to make phone screens with.
Score: 12 Votes (Like | Disagree)
Avatar
74 months ago

Doing business with Apple is pretty poisonous.


How is it poisonous? This is business: you promise results and fail, your partners don't pay you. They should have had a contingency plan.
Score: 8 Votes (Like | Disagree)

Top Stories

Leaker Shares Details on 'iPhone 13' Camera [Updated]

Wednesday May 27, 2020 4:27 pm PDT by
The next-generation iPhone 12 lineup coming in fall 2020 isn't out yet, but Fudge (@choco_bit), a leaker who sometimes shares information on upcoming Apple devices, today offered up details on what Apple has in store for the 2021 iPhone 13's camera setup. A simple design drawing depicts a device with a four camera array, which Fudge claims will have the following features: 64-megapixel...

Apple Begins Selling Refurbished iPhone XR Models

Thursday May 28, 2020 9:50 pm PDT by
Apple today began selling certified refurbished iPhone XR models in select colors and capacities for the first time in the United States. Refurbished iPhone XR models are priced at a roughly 16 percent discount compared to current pricing on brand-new units, knocking $100–120 off of the regular price. In addition to the 64GB and 128GB capacities matching current brand-new iPhone XR models, ...

Powerbeats Pro Debut in Four New Colors: Spring Yellow, Cloud Pink, Lava Red, and Glacier Blue

Friday May 29, 2020 10:00 am PDT by
Following a couple of leaks in recent weeks, Beats today is officially announcing four new colors for its Powerbeats Pro wireless earphones: Spring Yellow, Cloud Pink, Lava Red, and Glacier Blue. The new earphones will go on sale June 9 and sell for the same $249.95 price as the existing color options. Aside from the colors, the new Powerbeats Pro models are otherwise identical to the...

Apple Making It Harder to Avoid Nagging macOS Update Notifications

Thursday May 28, 2020 8:13 am PDT by
With the release of macOS Catalina 10.15.5 and related security updates for macOS Mojave and High Sierra earlier this week, Apple is making it more difficult for users to ignore available software updates and remain on their current operating system versions. Included in the release notes for macOS Catalina 10.15.5 is the following:- Major new releases of macOS are no longer hidden when...

8 Mac Tips and Tricks You Might Not Know

Friday May 29, 2020 12:36 pm PDT by
There are tons of hidden features and shortcuts for Macs that Apple has built into macOS over the years, ranging from shortcuts to keyboard commands to other little hacks to make Mac usage just a bit simpler. In our latest YouTube video, we highlighted several of these tips and tricks, and some of them might just be new to you. Subscribe to the MacRumors YouTube channel for more videos. Tr...

Apple Releases macOS Catalina 10.15.5 With Battery Health Management Features, Fix for Finder Freezing

Tuesday May 26, 2020 1:59 pm PDT by
Apple today released macOS Catalina 10.15.5, the fifth update to the macOS Catalina operating system that was released in October 2019. macOS Catalina 10.15.5 comes two months after the launch of macOS Catalina 10.15.4, which introduced Screen Time Communication Limits. macOS Catalina 10.15.5 is a free update that can be downloaded from the Mac App Store using the Update feature in the...

Top Stories: macOS 10.15.5, New Powerbeats Pro Colors, iPhone 12 and 13 Rumors, and More

Saturday May 30, 2020 6:00 am PDT by
This week saw an interesting mix of news and rumors on the Apple front, led by the release of macOS 10.15.5, which brings a new battery health feature to newer Mac notebooks, while we also saw the official announcement of new colors for the Powerbeats Pro earphones. On the rumor front, we heard a few tidbits about not just this year's iPhone 12 but also next year's iPhone, while we saw...

More Photos and Video of Apple's Redesigned Leather Loop Watch Band Surface

Thursday May 28, 2020 10:50 am PDT by
Images of a new version of the Leather Loop that Apple appears to have in development surfaced yesterday, and today, Vietnamese site Tinhte.vn has shared additional photos and videos that give us a clearer picture of what to expect from the new band. The bands come in colors that include red, hot pink, blue, black, and brown, with some of the bands featuring different colored accents at the...

Philips Hue Play HDMI Sync Box Gains HDR10+ and Dolby Vision Support, Plus Siri Voice Control

Thursday May 28, 2020 12:00 am PDT by
The Philips Hue Play HDMI Sync Box is receiving a major update today, introducing much-desired features like HDR10+ and Dolby Vision support. Designed by Signify as part of the Philip Hue line of lights and accessories, the Hue Play HDMI Sync Box is designed to let Hue users sync their lights to their home entertainment systems. One of the major complaints about the Hue Play HDMI Sync Box ...

APFS Bug in macOS 10.15.5 Catalina Impacts the Creation of Bootable Backups

Thursday May 28, 2020 3:47 am PDT by
An Apple File System bug has been discovered in macOS 10.15.5 Catalina that can prevent users from making a bootable clone of their system drive, according to the creator of Carbon Copy Cloner. In a blog post on Wednesday, software developer Mike Bombich explained that the CCC team had uncovered the issue in the Apple File System, or APFS, when attempting to create a bootable backup in a...