Mismanagement and Inexperience Contributed to GT Advanced's Sapphire Failures

[MacRumors]

It's widely known by now that Apple and GT Advanced's sapphire partnership fell apart after the latter company was unable to produce enough high-quality sapphire to meet Apple's production needs, but The Wall Street Journalhttp://online.wsj.com/articles/inside-apples-broken-sapphire-factory-1416436043 has taken a deeper look into GT Advanced's failures and its defective sapphire boules, which ultimately led the company to file for bankruptcy.

GT Advanced COO Daniel Squiller suggested in a court affidavit that Apple had essentially forced the company into a contract with "oppressive and burdensome" terms that made it impossible for GT Advanced to produce quality sapphire and meet deadlines, but the profile from The Wall Street Journal, largely sourced from Apple's court filings, paints a different picture, putting much of the fault on GT Advanced's mismanagement.

The partnership between the two companies may have been doomed from the start, as GT Advanced had little experience mass producing sapphire before it inked a deal with Apple. A first attempt at a 578 pound sapphire boule was reportedly "flawed and unusable," while another was "cracked so badly" the sapphire was unusable. More than half of the sapphire boules that took $20,000 and 30 days to produce ended up in a "boule graveyard."

According to employees that spoke to The Wall Street Journal, an effort to hire enough staff to operate the sapphire furnaces led to management problems as there were employees who had little to do.

GT quickly set out to hire 700 staffers. Hiring moved so quickly that at one point in late spring, more than 100 recent hires didn't know who they reported to, a former manager said. Two other former workers said there was no attendance policy, which led to an unusual number of sick days.

GT managers in the spring authorized unlimited overtime to fill furnaces materials to grow sapphire. But GT hadn't built enough furnaces yet, so many workers had nothing to do, two former employees said.

"We just kept sweeping the floors over and over," one of the former employees said. "I just saw money flying out the door."

As the months passed and GT Advanced failed to meet necessary production milestones in a timely manner, it became clear that Apple was not going to use sapphire in the iPhone 6. According to court documents, while Apple was going in an alternate route for iPhone 6 and 6 Plus displays, GT Advanced was burning through money, spending $248 million in a single quarter. As described by GT Advanced COO Daniel Squiller, the deal ended up causing GT to "divert an inordinate amount of its cash and corporate resources" into the Mesa, Arizona facility.

Apple ended up withholding a final $139 million loan payment from GT Advanced, furthering its financial woes, and though Apple attempted to lend aid in the form of a partial payment and delayed loan repayments, GT advanced opted to file for Chapter 11 Bankruptcy protection in order to get out of its contracts after it "could not economically produce a product that Apple would accept."

Apple and GT Advanced reached an agreement to officially end their partnership in October, nullifying the terms of the original deal. GT Advanced has already begun shutting down sapphire production at the Mesa, Arizona plant and will decommission and sell its sapphire furnaces in order to repay the loan from Apple.

More on what went wrong with GT Advanced's sapphire production and images of some of the broken and cracked sapphire boules can be seen in The Wall Street Journal's original story.

Article Link: Mismanagement and Inexperience Contributed to GT Advanced's Sapphire Failures

 

[farewelwilliams]

well...after that mess, I'm sure they leveled up a bit.

 

[Patriot24]

Apple and GT Advanced's sapphire partnership may have been doomed from the start because GT Advanced had no experience with mass producing sapphire before it inked a deal with Apple. Its first attempt at a large 578 pound sapphire boule, created just before the deal was finalized, was reportedly "flawed and unusable."

We've all been slinging mud at GT, but how in the world did Apple enter an agreement with these clowns without them proving that they could deliver?

That said, Apple clearly had a backup plan to use the standard gorilla glass on the 6/6+ and executed it when GT didn't deliver. Good planning on that front likely saved the year (what happens when you have millions of phones ready to go and no covers?).

 

[AppleWarMachine]

GT must have talked a good talk...

 

[NachoGrande]

I now see why there was no sapphire on the iPhone 6... Thankfully.

 

[FieldingMellish]

Businessman with dollars in their eyes. I lived in a condo built during boom times that was horribly built because of real estate executive's inexperience at building.

 

[dugbug]

No wonder GT blew threw its cash. Folks didn't even know who they reported to? Unmonitored sick days? Unlimited overtime with no work to do?

 

[McPc]

Wow, had Apple stuck with their sapphire plans can you imagine the production delays they would have incurred on the iPhone 6?

 

[Munch]

We've all been slinging mud at GT, but how in the world did Apple enter an agreement with these clowns without them proving that they could deliver?

That said, Apple clearly had a backup plan to use the standard gorilla glass on the 6/6+ and executed it when GT didn't deliver. Good planning on that front likely saved the year (what happens when you have millions of phones ready to go and no covers?).

Which is exactly why Apple put the terms that they did into the contract.

 

[tazinlwfl]

Yea, not surprised. Sucks that it didn't work out, but I'm sure someone else will figure it out (maybe even Apple with their new 'facilities').

 

[Z400Racer37]

"basically forced the company into a contract"

Soo..... Is that like forcing them to sign it, without actually forcing them to sign it? Basically?

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We've all been slinging mud at GT, but how in the world did Apple enter an agreement with these clowns without them proving that they could deliver?

That said, Apple clearly had a backup plan to use the standard gorilla glass on the 6/6+ and executed it when GT didn't deliver. Good planning on that front likely saved the year (what happens when you have millions of phones ready to go and no covers?).

Not a lot of clowns to choose from in the sapphire production space I guess..

 

[wesk702]

Don't play with the big boys if you can't get your **** together.

 

[nzalog]

We've all been slinging mud at GT, but how in the world did Apple enter an agreement with these clowns without them proving that they could deliver?

That said, Apple clearly had a backup plan to use the standard gorilla glass on the 6/6+ and executed it when GT didn't deliver. Good planning on that front likely saved the year (what happens when you have millions of phones ready to go and no covers?).

Why would any of that be Apple's responsibility? They gave a small company a huge opportunity but they didn't take it seriously enough and totally blew it.

 

[ShiftClick]

How big are those boules? Hard to see much for reference in the images. Dimension wise that is, I see the listed weight of the first one Just curious.

 

[Eriamjh1138@DAN]

Sounds like GTAT was a little incompetent and very wasteful with their money. Sounds like few companies I know that got some gubmint $$ and wasted it like Solyndra and A123 Systems.

I've seen waste like this first hand. It's shameful. In the end, good jobs are wasted, good money is wasted, and no one is better in the long run.

 

[T-Will]

Could we please get a NSFW label next time? The carnage...

 

[ahmet]

this whole story reminded me the south park episode humancentipad

 

[TallManNY]

The interesting thing is that this seems to be a production issue and not a technical issue that sapphire screens wouldn't be a nice and substantial improvement. So someone who can "cook" high quality sapphire in volume could still get this business. For Apple and possibly for other smartphone manufacturers.

 

[69Mustang]

Which is exactly why Apple put the terms that they did into the contract.

An even better idea would have been for Apple to partner with, oh I don't know, a company that knew what the hell it was doing. GT had no appreciable experience making sapphire but somehow convinced Apple they could go from selling furnaces to becoming manufacturers.

Sounds like Apple fell for the ol' banana in the tailpipe.

 

[kolax]

Well, that's a shame. It seems Apple were a little naive/incompetent with their expectations and GT were far too ambitious/greedy. Hope we see still Apple push on with their sapphire plans in the future though, as their rumoured 'best of glass and sapphire' compounds sounded quite interesting.

 

[Zaqfalcon]

Not recyclable?

 

[inscrewtable]

Spiral crack, horizontal crack, seed crack, black body crack, by the looks of it the operators were smoking crack.

 

[Robert.Walter]

tl:dr summary

The nincompoop management of GT oversold their competence and ability to deliver, failed to resolve their problems, bled cash due to these and due to paying people overtime rates for doing nothing.

The nincompoop management of GT failed to work with Apple as it offered them options for recovery, instead filing for bankruptcy a day before they were supposd to meet with Apple on a way forward.

The nincompoop management of GT made big bucks for themselves by selling their stock before the bottom fell out on news of their failure to deliver and running their money tanks dry.

The nincompoop management of GT tried to blame Apple for their own failures.

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Well, that's a shame. It seems Apple were a little naive/incompetent with their expectations and GT were far too ambitious/greedy. Hope we see still Apple push on with their sapphire plans in the future though, as their rumoured best of glass and sapphire compounds sounded quite interesting.

Maybe the Apple folks did due their due diligence, bargain in good faith, expect (believe) GT could (would) deliver, and just to be sure put performance clauses in their contract with GT, and developed a Plan B for covers just.in.case...

----------

Not recyclable?

Hopefully, the management of GT is not-recyclable...

 

[bruinsrme]

Why would any of that be Apple's responsibility? They gave a small company a huge opportunity but they didn't take it seriously enough and totally blew it.

Was the process even viable? I think its an assumption but it doesn't sound like it was ready for high volume.
Let's say for instance the process was somewhat working in Massachusetts and transferred to Pheonix, the altitude and humidity difference would surely need a period to be adjusted to compensate for the environmental differences.
Going from small scale to high volume isn't just putting in machines.
Water quality, variances in raw materials due to larger quantities will become a factor, the quality of gases needed may vary from the proving lab and so on.
Then there is the people factor.

It just sounds like the process was in its infancy. Perhaps if it was slated for the iPhone 7 the outcome would have been different.

 

[Mac'nCheese]

I would have loaned them the $139. Doesn't seem like a lot.