GT Advanced Asks Court for Permission to 'Wind Down' Operations at Sapphire Plant

[MacRumors]

After filing for Chapter 11 bankruptcy protection earlier this week, Apple sapphire partner GT Advanced has asked for the court's permission to "wind down" operations at its Mesa, Arizona manufacturing plant, reports Re/code and The Wall Street Journal.

GT is said to be filing motions to get expedited hearings to cease certain operations and get out of both contracts and leases connected to those operations.

The facility, which was purchased and outfitted by Apple and run by GT Advanced, has operated for less than a year. Approximately 700 employees are employed at the manufacturing plant, where GT Advanced was rumored to be creating sapphire for use in Apple products like the Apple Watch and the iPhone 6 and 6 Plus.

Furnaces for sapphire production​

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Little information about the reasoning behind GT Advanced's bankruptcy filing is available as the company has asked for a non-disclosure in its bankruptcy proceedings. GT is subjected to a confidentiality agreement with an unnamed third party (confirmed to be Apple by a courtroom reference) that has prevented it from disclosing details about the bankruptcy. The company could be fined up to $50 million per violation for breaking the agreements.

GT's bankruptcy filing took both Apple and Wall Street by surprise. Apple has reportedly been working with GT Advanced to help it remain solvent and to help it receive its final $139 million payment, but it is unclear how this latest request will impact the relationship between the two companies.

According to The Wall Street Journal, the deal between GT Advanced and Apple may have crumbled following the former's failure to deliver sapphire iPhone screens for the iPhone 6 and 6 Plus. Apple was widely expected to use sapphire screens in at least some models, but both the iPhone 6 and the iPhone 6 Plus continue to feature Gorilla Glass displays.

GT Advanced will again appear in court on October 15 at a hearing related to its wind-down request. Apple, for its part, has again said that it plans to focus on "preserving jobs" in Arizona and that it will "work with state and local officials" as it considers its next steps.

Article Link: GT Advanced Asks Court for Permission to 'Wind Down' Operations at Sapphire Plant

 

[farewelwilliams]

i can hear the power down noise now.

 

[brendu]

I really wonder whether this will affect watch production.

 

[kas23]

So it sounds like the bankruptcy is a ploy to get out of their Apple contract.

 

[Apple...]

Did Apple just waste all that money then?

 

[andrew0122]

ion infused glass they said . . . it'd be better they said.

I want Sapphire and I want it NOW!! (To the jingle of JG Wentworth)

 

[goldenboy48]

There is definitely something fishy going on behind the scenes.

 

[joneill55]

Alternate sapphire vendor contracts for iWatch in 3, 2, 1!

 

[Saiz]

This plant is right down the street from my house, I drive past it daily. They haven't seemed like they have been producing anything. It has more or less just been construction and setup for the past 12 months. The building was already built but empty when Apple bought it and GTAT moved in.

 

[bengay]

Something smells fishy. GTAT CEO sold all stocks and filed bankruptcy. Selling stocks is fine if the company is doing well but this isn't the case.

 

[TechGod]

Something smells fishy. GTAT CEO sold all stocks and filed bankruptcy. Selling stocks is fine if the company is doing well but this isn't the case.

It isn't deemed "insider trading"

 

[TT D'arby]

Unbeknownst to us, there is a rumbling underfoot for this procurement offer. I predict GT's CEO will be indicted under Arizona statutes regarding bereavement conditions of confidentiality. They'll also have to disclose their offers for furnace installations that Apple paid consequently for, along with the back-pay for 700 employees. Just my 2 cents.

 

[3282868]

This doesn't add up. Apple invested heavily into this company, and tried to help them through this surprise Chapter 11 filing. If the third party was Apple, and GTA could not disclose crucial documents due to an NDA with Apple, I would expect Apple would allow some leeway to keep operations going. It seems more that GTA slacked off on their obligations, probably management and greed, and are looking for an easy out. If I were Apple, I'd make sure to get that money back and get on another company to meet your products demands, otherwise more delays in product pipelines.

 

[kwikdeth]

There is definitely something fishy going on behind the scenes.

you said it. something is waaaaaaaaaaay off here.

 

[HiRez]

Whoa, this is not good at all. I really wonder if the product is just not viable for the intended use (phone screens), or if they simply ran out of cash. If the produce is viable, Apple should just buy the factory and run it themselves or get someone else to do it. They already have a lot of cash sunk into it.

 

[Parasprite]

You didn't see a thing.

 

[nfable]

Begs for conspiracy theories at this point, so here's mine:

Apple injects GTAT with some cash for new facility & infrastructure and gets on the same page with them about production of Apple's items.

Apple wants to be the only girl on the dance floor, but GTAT has cards in his basket of others they're slated to dance with (contractual obligations with other -potentially Apple competing- companies they must carve of production schedule to).

Apple has them implode in order to not have to pay full market evaluation of GTAT, dissolves supplier contracts with other co's, and sweeps in buying a turn-key operation and GTAT CEO becomes Apple's Chief Crystollogist and rehires key members of GTAT's team under new thrall-ship. Afterall,

Apple, for its part, has again said that it plans to focus on "preserving jobs" in Arizona and that it will "work with state and local officials"

.

Any takers?

 

[furi0usbee]

I don't undertand this whole thing! Why wouldn't Apple simply buy the company outright and be done. Why loan them money, then not pay them, and now have a falling out? Apple probably realized the screens weren't any better than what they have now.

 

[HiRez]

Technically they already own it.

Is that actually true though? Investment does not necessarily equate to equity, I'm not really sure what the specifics are. Plus, if they are going into bankruptcy and have other debts, is equity in the company a good thing? Doesn't that imply you also own part of the debt?

----------

Begs for conspiracy theories at this point, so here's mine:

Apple injects GTAT with some cash for new facility & infrastructure and gets on the same page with them about production of Apple's items.

Apple wants to be the only girl on the dance floor, but GTAT has cards in his basket of others they're slated to dance with (contractual obligations with other -potentially Apple competing- companies they must carve of production schedule to).

Apple has them implode in order to not have to pay full market evaluation of GTAT, dissolves supplier contracts with other co's, and sweeps in buying a turn-key operation and GTAT CEO becomes Apple's Chief Crystollogist and rehires key members of GTAT's team under new thrall-ship.

That really doesn't smell far-fetched to me. Something is definitely weird here and that theory makes as much sense as any. It's hard to believe Apple could have so much invested and be so deeply involved in what the company was doing without also being more aware of their financial situation.

 

[Parasprite]

Is that actually true though? Investment does not necessarily equate to equity, I'm not really sure what the specifics are. Plus, if they are going into bankruptcy and have other debts, is equity in the company a good thing? Doesn't that imply you also own part of the debt?

I was thinking more of the equipment.

Now that I think about it, I'm pretty sure I'm just not awake enough yet because that comment is making less and less sense the more I think about it.

 

[ravenvii]

Wonder if Corning is feeling vindicated by this?

 

[jayducharme]

Even though there was talk of Apple's experiments with modifying sapphire, I wonder if Apple gradually discovered that the material couldn't provide the durability they expected (i.e.: scratch-proof but too easily shattered). So they postponed its use, which then sent GT into a tailspin.

Even so, Apple sunk so much money into that plant that I find it hard to believe that GT would have to file bankruptcy so soon. There must have been other customers interested in sapphire (unless Apple had an exclusivity on all production). I agree that something's amiss.

 

[azentropy]

Guess my bet of buying a bunch of shares ~ $1 isn't going to pay off...

 

[grahamperrin]

… wonder if the product is just not viable for the intended use (phone screens), or if they simply ran out of cash. If the produce is viable, Apple should just buy the factory and run it themselves or get someone else to do it. …

Specialty Sapphire Products presents GT Advanced Technologies as the leader in some areas.

If GTAT could not produce what was required by Apple, when required, then I doubt that any other company stepping in would increase the likelihood of those requirements being met …

 

[tjleonard]

Guess my bet of buying a bunch of shares ~ $1 isn't going to pay off...

I'm just trying to figure out how much I'm willing to lose or wait it out. On one hand, it's super shady...on the other, Apple obviously trusted them. I agree that something doesn't add up...part of me thinks the shares will go back up, assuming the CEO of GTAT doesn't get thrown in prison...

How much they will come up from $1 a share? That's what I keep asking myself.


And by "go back up", i am thinking ~1.75, not where they were.