GT Advanced Saw Production Troubles as Early as February

GT Advanced Technologies, Apple's sapphire partner, may have been seeing production problems and missing technical milestones as early as February, according to a new report from The Wall Street Journal that examines GT's securities filings.

It's widely known that Apple did not provide GT Advanced with a fourth and final $139 million loan payment aimed at giving the sapphire supplier a means to purchase vital equipment, but Apple also delivered its third payment to the company two months after it was expected.

gt_advanced_logo
GT was set to receive a $103 million payment in February of 2014, but did not receive the payment until April 2014, two months later, as it had failed to meet Apple's requirements on time.

The third payment, of $103 million, was due in February, but Apple did not make it until April, according to GT's securities filings. The final installment of $139 million was due in April, according to a GT securities filing. In August, GT said it expected the payment by October. But Apple never made the payment, because GT did not meet certain requirements, according to people familiar with the matter.

Shortly after GT Advanced missed its February payment, the company's CEO, Thomas Gutierrez and its Chief Operating Officer, Daniel Squiller, set plans in motion to begin selling off stock. While the timing of their subsequent sales was subject to the schedules laid out in their trading plans, it is clear those plans were established after GT began having difficulties meeting its milestones.

Gutierrez set up a pre-arranged Rule 10b5-1 sale in March, which saw him selling more than 9,000 shares of GT Advanced stock on September 8, a day ahead of Apple's iPhone announcement. Gutierrez also sold off stock throughout the year, netting more than $10 million before stock prices faltered after it became clear Apple was not using sapphire in the iPhone 6 and 6 Plus.

Squiller sold $1.2 million worth of stock in May and made plans to sell off additional shares throughout 2014, garnering another $750,000 before the company filed for bankruptcy. Squiller continues to hold more than 200,000 shares of GT stock, which have lost much of their value.

Apple did end up making a total of three loan payments to GT Advanced totaling $440 million after signing an agreement in October of 2013, and the company also reportedly tried to help the supplier meet the requirements to receive the fourth payment ahead of GT's surprise Chapter 11 bankruptcy filing.

GT Advanced's deal with Apple was highly favorable to the Cupertino-based company, with the sapphire supplier taking on all of the risk. Apple supplied the facility and the loan for the company to purchase equipment, but GT was required to meet technical milestones to receive the money and it also signed contracts that prevented it from selling its sapphire to other companies. Apple, meanwhile, was under no obligation to purchase GT's sapphire.

Details about the deal's deterioration have been coming out bit by bit, making it difficult to piece together exactly what went wrong. It appears that GT's failed to produce sapphire up to Apple's standards, leading the company to stick with Gorilla Glass instead of sapphire screens for its iPhones. GT Advanced has been able to supply little information on its bankruptcy filing, as it is bound by non-disclosure agreements that could see it paying $50 million in fines for each violation.

Apple and GT Advanced have asked to keep court documents sealed, but The Wall Street Journal today filed a motion asking the court make the documents public.

Following its Chapter 11 bankruptcy filing, GT Advanced last week asked for permission to begin winding down operations at its Mesa, Arizona sapphire plant, suggesting the company plans to cease its sapphire production all together. Apple has said that it plans to focus on "preserving jobs" in Arizona, and is working with local and state officials as it considers its next steps.

Top Rated Comments

bawbac Avatar
95 months ago
Now we know what GT standard for, Grand Theft.
Score: 51 Votes (Like | Disagree)
Rudy69 Avatar
95 months ago
I'll let you guess who was spreading rumours that the next iPhone was going to use a sapphire screen. And they had a planned sale of stocks just before the iPhone announcement.... what a coincidence :eek:
Score: 33 Votes (Like | Disagree)
VulchR Avatar
95 months ago
Management gets millions... workers get unemployed. Because it's the management that take risks. :rolleyes:
Score: 33 Votes (Like | Disagree)
mad3inch1na Avatar
95 months ago
That CEO sure sounds legit...
Score: 33 Votes (Like | Disagree)
iSee Avatar
95 months ago
GT Advanced's deal with Apple was highly favorable to the Cupertino-based company, with the sapphire supplier taking on all of the risk.

Seems like Apple took on plenty of risk. We'll see how much of that $440 million they get back.
Score: 29 Votes (Like | Disagree)
iLoveiTunes Avatar
95 months ago
Oh boy... this screams insider trading
Score: 28 Votes (Like | Disagree)

Popular Stories

iPhone 14 Mock pill and hole thumb

ProMotion Now Expected to Remain Exclusive to iPhone 14 Pro Models, Not Expand to Entire Lineup

Sunday January 16, 2022 8:56 am PST by
Continuing the tradition set with the iPhone 13 Pro, only the highest-end iPhone 14 models will feature Apple's ProMotion display technology, according to a respected display analyst. Ross Young, who on multiple occasions has detailed accurate information about Apple's future products, said in a tweet that ProMotion will not be expanded to the entire iPhone 14 lineup and will remain...
AirPods Pro Gen 3 Mock Feature Red

AirPods Pro 2 Could Start a New Accessory Ecosystem

Friday January 14, 2022 2:34 am PST by
Apple's second-generation AirPods Pro could arrive alongside a new series of accessories, recent leaked images suggest. Alleged leaked photos of the next-generation AirPods Pro obtained by MacRumors showed a charging case with a metal loop on the side for attaching a strap. Apple has not used this design for any of its other AirPod models and it is unclear why it would be added in this...
Unlikely Products 2022 Feature

Six Rumored Apple Products You're Unlikely to See This Year

Saturday January 15, 2022 2:06 pm PST by
Much has been said about what consumers could see from Apple in 2022, but the company is also working on a handful of rumored products that aren't expected to be unveiled for at least another 12 months, and in some cases a lot longer. Of course, that's assuming they get released at all. Apple works on many potential products some of which ultimately never see the light of day. With that in...
safari icon blue banner

Safari Bug Allows Websites to Track Your Recent Browsing Activity in Real Time

Sunday January 16, 2022 3:37 pm PST by
A bug in WebKit's implementation of a JavaScript API called IndexedDB can reveal your recent browsing history and even your identity, according to a blog post shared on Friday by browser fingerprinting service FingerprintJS. In a nutshell, the bug allows any website that uses IndexedDB to access the names of IndexedDB databases generated by other websites during a user's browsing session....
ipad air 4 video

New iPad Air Rumored to Launch This Spring With A15 Chip, 5G, Center Stage Camera, and More

Saturday January 15, 2022 8:05 pm PST by
Apple is planning to release a fifth-generation iPad Air with similar features as the sixth-generation iPad mini, including an A15 Bionic chip, 12-megapixel Ultra Wide front camera with Center Stage support, 5G for cellular models, and Quad-LED True Tone flash, according to Japanese blog Mac Otakara. Citing reliables sources in China, the report claims that the new iPad Air could be...
netflix2

Netflix Again Raises Prices for All Plans, 4K Streaming Now $20 Per Month

Friday January 14, 2022 12:46 pm PST by
Netflix today updated the prices for its streaming plans, and all of its offerings are now more expensive. The Basic plan is now priced at $9.99 per month, the Standard plan is priced at $15.49 per month, and the Premium plan is priced at $19.99 per month. The Basic plan is $1 more expensive, up from $8.99 per month. This plan allows users to watch on just one screen at a time, and it limits ...
top stories 20220115

Top Stories: iPhone 14 Pro Rumors, iCloud Private Relay Controversy, iOS 15.2.1 Released, and More

Saturday January 15, 2022 6:00 am PST by
Hole-punch? Pill? Hole-punch and pill? Rumors about what the front camera system on the iPhone 14 Pro will look like are evolving rapidly, and it now appears we might be getting a novel but potentially controversial design later this year. Other major stories this week included some confusion and controversy about iCloud Private Relay being disabled for some T-Mobile customers, increasing...
iPhone 14 Mock pill and hole 16x9 120hz

Analyst: All iPhone 14 Models to Feature 120Hz Displays, 6GB of RAM, and More

Friday January 14, 2022 7:02 am PST by
Apple is rumored to announce four new iPhone 14 models in September, and ahead of time, analyst Jeff Pu has outlined his expectations for the devices. In a research note with Haitong International Securities, obtained by MacRumors, Pu claimed that all iPhone 14 models will feature ProMotion displays, compared to only Pro models currently. ProMotion enables a variable refresh rate up to 120Hz ...