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GT Advanced Technologies Officially Announces Sapphire Settlement With Apple
Earlier this week, it was revealed that Apple and its sapphire supplier GT Advanced Technologies had reached an agreement to effectively dissolve their partnership and allow GT to shut down operations at the Apple-owned sapphire production plant in Mesa, Arizona. Under the deal, GT will seek to sell off the over 2,000 sapphire furnaces currently installed at the facility, with the majority of the proceeds from those sales going to Apple to help repay $439 million in loans Apple made to help the operation get underway.
GT has now officially announced the deal and published the full agreement, redacting only the amounts Apple will be paid per furnace sold.
Under the terms of the settlement agreement, which is subject to approval by the Bankruptcy Court, GT will be released from all exclusivity obligations under its various agreements with Apple. GT will retain ownership of all production, ancillary and inventory assets located in Mesa and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF® [Advanced Sapphire Furnace] sales. The agreement provides for a mutual release of any and all claims by both parties. As a result of the agreed upon terms, GT retains control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion™, without restrictions.While the two companies are severing their production agreement, they will remain in contact as GT continues its research work focused on producing larger sapphire boules of over 165 kilograms. The two companies will meet at least quarterly to discuss GT's progress on that front, with potential collaboration still possible if both sides agree to move forward.
GT filed for bankruptcy earlier this month as it became clear the company was spending over a million dollars per day to run the operation even as it was apparently unable to produce sapphire of the quality required by Apple. GT's troubles began as early as February as it was late in meeting milestones to qualify for Apple loan payments. Apple's continued withholding of the final $139 million payment may ultimately have resulted in GT deciding to pull the plug on the operation, even as Apple reportedly continued to try to help overcome GT's technical problems.
GT is looking to wind down its sapphire production operation by the end of the year, wrapping up sapphire boule production currently underway and decommissioning the furnaces to prepare them for storage and resale. Roughly 650 employees at the Arizona plant have already been laid off, and the company will continue to lay off additional employees across its locations as it brings the production partnership with Apple to an end.
(Image: GT's Advanced Sapphire Furnace)
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56 months ago
And that's what happens when you scroll to the bottom and click Accept without reading an agreement.
56 months ago
This is completely baffling.
Apple gives that company half a billion dollars, gets nothing out of the partnership, and now both parties just walk away?
I hope a few years from now we'll find out what really happened there.
Why is it so baffling? When you make investments, they don't always pan out. You do what you can to recoup as much as possible and then you move on.
What more do you expect to learn? I doubt there is much of interest left to be discussed at this point.
56 months ago
Why is it so baffling? When you make investments, they don't always pan out. You do what you can to recoup as much as possible and then you move on.
Exactly. Apple has had internal projects that have failed as well were they have invested millions in R&D for something that didn't produce the desired results. This one just happened to involve a third party and be more public.
56 months ago
$1M per day - sheesh
That is an absurd amount of money for a company producing virtually nothing. I'm still thinking back to that sales guy GT let go around April 2014 who claimed on his resume that he sold the sapphire idea to Apple. I'm guessing that's part of why he was let go, also guessing that he might want to remove that from his resume.
56 months ago
This is completely baffling.
Apple gives that company half a billion dollars, gets nothing out of the partnership, and now both parties just walk away?
I hope a few years from now we'll find out what really happened there.
Apple gives that company half a billion dollars, gets nothing out of the partnership, and now both parties just walk away?
I hope a few years from now we'll find out what really happened there.
56 months ago
Aside from Everyones Opinion, which is All In The Past Now
SO,
WHO
is going to make all the Sapphire Glass Apple needs today, for camera and Touch ID glass, Plus for some of the iWatch models, that will need it this spring???
:eek:
SO,
WHO
is going to make all the Sapphire Glass Apple needs today, for camera and Touch ID glass, Plus for some of the iWatch models, that will need it this spring???
:eek:
56 months ago
It looks like it was a technical dead end. That is to say that sapphire will not be suitable for phone screens anytime soon. What is puzzling is that if it were a technical issue, you'd think that would have been discovered early on before ordering thousands of furnaces.
The other alternative is that it was a cost issue, but if that was the case you'd think Apple would have tried harder to keep GT alive in the hopes of bringing the cost down in the future.
Yet another possibility is that corning was able to improve gorilla glass more than expected over the last few years, making sapphire less attractive than it was a couple years ago when this deal was getting rolling.
Actually, we can't conclude it was a technical dead end. Or they wouldn't have invested that much in the first place. They undoubtably had made smaller volume test production runs that WERE satisfactory. We can only conclude that it could not be produced at the quality level they wanted at the VOLUME they wanted. Apple needs extraordinary amount of screens.
56 months ago
SO,
WHO
is going to make all the Sapphire Glass Apple needs today, for camera and Touch ID glass, Plus for some of the iWatch models, that will need it this spring???
:eek:
SO
WHO
Makes all the Sapphire glass they use now and for EVERY OTHER WATCH ( with sapphire glass - there are thousands of them )
:D
There is no problem making small size Sapphires - It's been done for decades. It's the large format Boules that were needed for smartphone / tablet displays that Apple were interested in.
There are many many companies making watch sized glass.
----------
The whole thing stinks of mismanagement, insider dealing and screwing over all the workers.
I am sure they had good intentions but basically didn't have the talent to make it happen.
I still think Apple should buy up the plant and Furnaces and make it work. and give all those dudes their jobs back.
56 months ago
Your definition of screwed and my definition of screwed are vastly different. Apple got the one thing they truly wanted from this deal: non-disclosure of the contract details. Everything else is considered gravy. As others have stated, Apple has had other projects fail that weren't as high profile as this one. That type of investment is just everyday business. It's the cost of, one of the favorite words on this forum, innovation and progress. Some you win, some you lose. Considering they will get a small portion of their investment back (25-30% if lucky) from the liquidation of the furnaces, Apple comes out pretty nicely.
In my opinion, GTAT got a better deal in this negotiation than in the original contract because they had leverage; the non-disclosure. Both parties walked away with something they desired. Apple got to keep it's secrets and GTAT got a chance to punt and start over. They don't get to keep the equipment, but they do get to keep their IP. I wish there were more repercussions for GTAT management but executives rarely bare the brunt in business. I sincerely feel bad for the people losing their jobs. Apple's losses pale in comparison. The employees got a ****** deal.
Your definition of screwed and my definition of screwed are VERY different.
Everybody thought Apple had this HUGE competitive advantage by being literally the ONLY company that could offer large sapphire screens... as no such equipment existed that could do such a thing until Apple paid to have them built.
Now, GT has this tech & equipment because of Apple. Apple will likely NEVER do business with them again.... soooooo, in essence- they paid a ton of money to give every single company OTHER THAN THEMSELVES a competitive advantage in this area. This sucks!!!! I'd rather take my life savings, put it in a big pile & burn it than give it to my worst enemy... Get it??!!
Apple got REALLY badly screwed.
It's laughable that you think they turned out ok because other companies don't get to see the EXACT details of secret Apple contracts. Wow.... so that negates that they put a HUGE investment in a tech that literally cannot be replicated elsewhere (GT owns BOTH the equipment AND the patents) & everybody else now has access to, though they did NOT invest a dime?? Ummm. Ok. *scratches head*
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