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  • GT Advanced Basically Blaming Apple for Bankruptcy


    On Monday, Apple's sapphire partner GT Advanced Technologies announced it has filed for Chapter 11 bankruptcy protection.

    GT indicated in a news release that it is taking proactive steps to stop the bleeding, but only as the week progressed have we gained more insight as to what those steps would entail.

    While the company said it regrets the potential lost jobs, winding the facility down by the end of the year will help “stop its mounting losses.” The company said it would seek to close the plant during a court hearing Thursday.
    So what's behind the company's seemingly abrupt financial turn for the worse? According to GT, Apple is pretty much the catalyst for this economic calamity.

    “The cash burn at GTAT’s sapphire manufacturing operations for the benefit of Apple is not sustainable,” attorneys for GT Advanced are quoted today by the Wall Street Journal.

    Ouch.

    The WSJ says, "in seeking to reject the agreements with Apple, GT Advanced said it wants permission to assert further claims against Apple in the future." In filings with U.S. Bankruptcy Court in New Hampshire, GT argued that "it has many claims against Apple arising out of its business relationship with Apple.”

    Not mincing words, GT Advanced called its sapphire-production related agreements with Apple “oppressive and burdensome.”

    Source: WSJ
    GT Advanced to Close Arizona, Massachusetts Sapphire Plants - WSJ
    This article was originally published in forum thread: GT Advanced Basically Blaming Apple for Bankruptcy started by Michael Essany View original post
    Comments 14 Comments
    1. peacedog's Avatar
      peacedog -
      It's a shame that Apple is so big, they can crush small companies with a bat of an eye. These companies ramp up infrastructure, lock in materials contracts, and hire employees in anticipation of Apple's business. Then Apple change their minds. Now the company is stuck with all the overhead and expenses. If Apple had a contract with them, shame on Apple. If GTAT ramped up production without a contract, they gambled and lost.
    1. edwilk55's Avatar
      edwilk55 -
      Sounds like they made agreements with Apple based on expectations they then couldn't fullfill and are now seeking to blame deep pockets to get them ou
    1. PCYoda's Avatar
      PCYoda -
      Sometimes as a company you have to realize that some contracts are too big for you to fulfill.

      I was a Marketing Director at a IT sales company that had annual revenues of around $20M. One of the sales representatives had an "in" with a regional government that had an annual IT spend of... we'll just say more than that. In the $100M range.

      When the sales rep came to me, I told him we didn't want the business. Why? Because our company didn't have the cash flow to float the amount of credit that would be required to fulfill even a fraction of their spending, and because the customer had a local reputation of not paying for 90-180 days after they'd been invoiced, making the cash flow situation that much worse.

      It sounds great as a small company to think you can pull in a whale of an account like Apple - but if you don't have the business infrastructure and operational efficiency in place to manage the account, that while will swallow you whole and pull you under. Sometimes discretion is the better part of valor.
    1. Kupe's Avatar
      Kupe -
      I would expect an announcement of further delays to Apple Watch to follow...
    1. csglinux's Avatar
      csglinux -
      Or if GTAT had to reach certain target goals, but failed, they also gambled and lost. Either way, it's sad. I was hoping the "S" in next year's 6S and 6S Plus would stand for sapphire. There's no way that's happening now, because nobody else out there has the production capacity. So everyone's going to be stuck with these curved glass screens where no screen protector can properly cover the whole surface :-(

      I mean really, is there ONE screen protector out there right now that truly offers edge-to-edge coverage? (No need to reply, it's a rhetorical question. No, really. Even iloome's new product misses the mark.)
    1. bigboyz's Avatar
      bigboyz -
      Looks like the fish was too big for the boat. Rock the boat?? :]
    1. scorpio02150's Avatar
      scorpio02150 -
      I wouldnt even release a statement and just let things go through court.
      GT was too dumb to realize that it couldnt produce millions and millions pieces of sapphire.
    1. Raptor2213's Avatar
      Raptor2213 -
      Quote Originally Posted by edwilk55 View Post
      Sounds like they made agreements with Apple based on expectations they then couldn't fullfill and are now seeking to blame deep pockets to get them ou
      My thoughts exactly.
    1. exNavy's Avatar
      exNavy -
      Last time I checked it takes two to tango or sign a legal binding agreement. Can't hack it? Then don't sign. Otherwise learn how to run a company and stop whining about it.

      I think that's a very one sided take on this.
    1. MPS3's Avatar
      MPS3 -
      apple is known for pulling crap like this all the time
      cus they are so big they can always get away with this
      walmart is not any better
    1. HeliPilot's Avatar
      HeliPilot -
      Quote Originally Posted by MPS3 View Post
      apple is known for pulling crap like this all the time
      cus they are so big they can always get away with this
      walmart is not any better
      Been doing my research on this for quite some time. Almost invested heavily in GT awhile ago until I discovered that they could not provide what they had said they could provide, bit off more then they could chew you might say. Apple fulfilled all of their obligations to GT even paying most of the investment up front to GT.
      GT screwed up, plain and simple. So I can't really understand how you can say Apple pulls this crap all the time.
    1. Carvensno's Avatar
      Carvensno -
      Quote Originally Posted by csglinux View Post
      Or if GTAT had to reach certain target goals, but failed, they also gambled and lost. Either way, it's sad. I was hoping the "S" in next year's 6S and 6S Plus would stand for sapphire. There's no way that's happening now, because nobody else out there has the production capacity. So everyone's going to be stuck with these curved glass screens where no screen protector can properly cover the whole surface :-(

      I mean really, is there ONE screen protector out there right now that truly offers edge-to-edge coverage? (No need to reply, it's a rhetorical question. No, really. Even iloome's new product misses the mark.)
      Correct if i'm wrong, but I believe Apple is doing business with 2-3 other Sapphire companies are they not? GT was just one of them.
    1. RyoSaeba's Avatar
      RyoSaeba -
      Is it confirmed that it was indeed GT's fault for not meeting a required number, or did Apple simply didn't want to spend the extra money thinking it wouldn't matter because a screen glass is not going to be a major deciding factor for consumers?

      If it was the later and if Apple said to GT "Go ahead with the preparations. We'll be back on xx date to sign the contract," then it would of totally been Apple's fault. Though it would be tough to prove in court...
    1. br8thw8's Avatar
      br8thw8 -
      Sounds like GT couldn't keep their end of the contract. modmyi had an earlier article: GT Advanced Technologies Reportedly Looking to "Wind Down" Arizona Plant Operations