GT Advanced Asks Court for Permission to 'Wind Down' Operations at Sapphire Plant

After filing for Chapter 11 bankruptcy protection earlier this week, Apple sapphire partner GT Advanced has asked for the court's permission to "wind down" operations at its Mesa, Arizona manufacturing plant, reports Re/code and The Wall Street Journal.

GT is said to be filing motions to get expedited hearings to cease certain operations and get out of both contracts and leases connected to those operations.

The facility, which was purchased and outfitted by Apple and run by GT Advanced, has operated for less than a year. Approximately 700 employees are employed at the manufacturing plant, where GT Advanced was rumored to be creating sapphire for use in Apple products like the Apple Watch and the iPhone 6 and 6 Plus.

sapphire_furnaces

Furnaces for sapphire production

Little information about the reasoning behind GT Advanced's bankruptcy filing is available as the company has asked for a non-disclosure in its bankruptcy proceedings. GT is subjected to a confidentiality agreement with an unnamed third party (confirmed to be Apple by a courtroom reference) that has prevented it from disclosing details about the bankruptcy. The company could be fined up to $50 million per violation for breaking the agreements.

GT's bankruptcy filing took both Apple and Wall Street by surprise. Apple has reportedly been working with GT Advanced to help it remain solvent and to help it receive its final $139 million payment, but it is unclear how this latest request will impact the relationship between the two companies.

According to The Wall Street Journal, the deal between GT Advanced and Apple may have crumbled following the former's failure to deliver sapphire iPhone screens for the iPhone 6 and 6 Plus. Apple was widely expected to use sapphire screens in at least some models, but both the iPhone 6 and the iPhone 6 Plus continue to feature Gorilla Glass displays.

GT Advanced will again appear in court on October 15 at a hearing related to its wind-down request. Apple, for its part, has again said that it plans to focus on "preserving jobs" in Arizona and that it will "work with state and local officials" as it considers its next steps.

Top Rated Comments

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74 months ago
So it sounds like the bankruptcy is a ploy to get out of their Apple contract.
Score: 30 Votes (Like | Disagree)
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74 months ago
There is definitely something fishy going on behind the scenes.
Score: 23 Votes (Like | Disagree)
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74 months ago
Did Apple just waste all that money then?
Score: 12 Votes (Like | Disagree)
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74 months ago
Even though there was talk of Apple's experiments with modifying sapphire, I wonder if Apple gradually discovered that the material couldn't provide the durability they expected (i.e.: scratch-proof but too easily shattered). So they postponed its use, which then sent GT into a tailspin.

Even so, Apple sunk so much money into that plant that I find it hard to believe that GT would have to file bankruptcy so soon. There must have been other customers interested in sapphire (unless Apple had an exclusivity on all production). I agree that something's amiss.
Score: 5 Votes (Like | Disagree)
Avatar
74 months ago
Begs for conspiracy theories at this point, so here's mine:

Apple injects GTAT with some cash for new facility & infrastructure and gets on the same page with them about production of Apple's items.

Apple wants to be the only girl on the dance floor, but GTAT has cards in his basket of others they're slated to dance with (contractual obligations with other -potentially Apple competing- companies they must carve of production schedule to).

Apple has them implode in order to not have to pay full market evaluation of GTAT, dissolves supplier contracts with other co's, and sweeps in buying a turn-key operation and GTAT CEO becomes Apple's Chief Crystollogist and rehires key members of GTAT's team under new thrall-ship. Afterall,

Apple, for its part, has again said that it plans to focus on "preserving jobs" in Arizona and that it will "work with state and local officials"

.

Any takers?
Score: 5 Votes (Like | Disagree)
Avatar
74 months ago
i can hear the power down noise now.
Score: 5 Votes (Like | Disagree)

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