Sapphire Glass Maker Splits Amicably with Oppressive Apple
Apple has reportedly agreed to an "amicable" split with GT Advanced Technologies, a New Hampshire-based supplier that abruptly filed for Chapter 11 bankruptcy protection earlier this month. Under the terms of the proposed breakup, a document filed by GT that outlines some of the company's terms with Apple would be kept under seal, with any extant paper or electronic copies to be destroyed.
GT was to have produced the sapphire glass needed for some versions of Apple's soon-to-launch Apple Watch. Following GT's Chapter 11 filing, announced on Oct. 6, Apple submitted an objection in the New Hampshire District of U.S. Bankruptcy Court seeking a blanket seal on a set of documents known as the Supplemental Squiller Declaration. Those documents, filed by GT COO Daniel Squiller, reportedly detailed Apple's "oppressive and burdensome" contract provisions with GT.
Under the breakup agreement announced by GT's attorneys on Tuesday -- but yet to be approved by the court -- those documents would remain under seal as Apple had requested. The proposed deal also calls for GT to try to sell more than 2,000 furnaces that Apple had helped it purchase for sapphire production at its Mesa, Arizona factory, with any proceeds from those sales going to help pay off the company's estimated $439 million debt to Apple.
No Sapphire Screens for iPhone 6
GT had partnered with Apple to produce scratch-resistant sapphire-crystal glass for some of the company's products. There had been speculation that Apple's new iPhone 6 and iPhone 6 Plus might feature GT sapphire screens. However, when the new phones hit the market on Sept. 19, they retained the traditional glass screens manufactured by Corning. Only the devices' camera lenses and TouchID buttons are made with sapphire glass.
Some versions of the Apple Watch set for release in 2015, though, are believed likely to require sapphire screens, meaning some of those products might be delayed.
Construction of GT's 1.4-million-square-foot Arizona plant was nearly complete in August when President and CEO Tom Gutierrez announced the company was "commencing the transition to volume production." He added at the time, "We remain confident about the long-term potential of the sapphire materials business for GT."
GT 'Not Going Out of Business'
Just two months later, upon announcing the company's bankruptcy filing, Gutierrez said: "GT has a strong and fundamentally sound underlying business. Today's filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet."
On Tuesday, GT attorney Luc Despins told Fortune that his company and Apple had agreed to "an amicable parting of the ways."
While the deal might satisfy the Cupertino, California-based tech firm's desires to keep its contractual terms with GT out of the public eye, it's less certain what all this might ultimately mean for Apple's sapphire-glass ambitions.
Posted: 2014-10-22 @ 11:08pm PT
The Supplemental Squiller Declaration document would likely have confirmed the following:
Apple fine is $50 million per leak: More NDA secrets may be revealed in court, plus future Apple products.
Then, many vendors would realize how much risk they are really taking on by signing these one-sided NDA documents.
Posted: 2014-10-22 @ 10:46pm PT
@ShondaM: Sometimes you don't realize how bad a production deal is until you're knee-deep in the process.
Posted: 2014-10-22 @ 10:43pm PT
@WhatKanisay: GT's COO claimed Apple's contract provisions were "oppressive and burdensome" and that's definitely a possibility. Obviously Apple had the upper hand in the contract negotiations and therefore had the opportunity to make the deal more one-sided than it should have been. I'm surprised you can't see that.
Posted: 2014-10-22 @ 9:45pm PT
Why did they agree to the contract if it is oppressive? They deserve to lose.
Posted: 2014-10-22 @ 9:06pm PT
"Sapphire Glass Maker Splits Amicably with Oppressive Apple"
How is Apple oppressive?
Someone brings a business proposition, lays out his terms and conditions.
You lay out your own condition and your minimum rate to do the job. Both sides agreed and signed the agreement.
Sometime down the road things didn't workout for you as you had hoped either due to your own negligence in carrying out a thorough due negligence or due to some other unforeseen circumstance.
Whose fault is it.
Did Apple held a gun to their head to force them sign the contract?
Apple had a stringent specification spelled out for GT. GT agreed and signed the agreement. GT got initial payment but failed to deliver quantity and quality as originally agreed to. Consequently Apple withheld further payments. How is that "oppressive"?