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Apple and GT Advanced Reach Deal to End Partnership, GT to Sell Furnaces to Pay Debt
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Because Apple can do anything better than any other company on earth, even if they know nothing about it. Or at least that's the impression I get from reading this forum everyday.
This sucks - we all want to know the truth, not least the employees who are losing their jobs. Apparently, Apple thinks a cover-up is the way to go!
"SOME of the proceeds"? So Apple will lose money on this? Sounds like they got the short end of the stick.
It's interesting that Apple appears to be abandoning sapphire for now. Corning must be pleased. Maybe Samsung will buy the furnaces.
I don't think they were ever expecting to use sapphire on iPhones. It never would solve the screen shattering problems and would always cost more than Gorille Glass. In the end it would've been just another iPhone bragging right that didn't amount to much.
I just hope this doesn't screw up Apple Watch production because Apple is already committed to millions of units for early 2015.
If i were to hazard a guess, i think it's possible that in their original agreement, Apple essentially wanted GTAT to undertake some of the materials R&D to see if it would be possible to manufacture sapphire on the scale needed to create a screen cover for an iPhone. Apple provided the cash upfront to buy the equipment to facilitate that R&D effort.
Again, purely speculation, but if that R&D didn't result in usable product, maybe Apple isn't "all-in" on sapphire for iPhone display covers after all. Perhaps at the required size and thickness, sapphire is too brittle, and maybe the resilience of Gorilla Glass makes it a more suitable material for that application. Kudos to them for trying.
Sapphire may work out perfectly in a display the size of the
WATCH, and i'm sure there are several other sapphire manufacturers Apple could choose from, since sapphire in that size is already commonplace in the watch industry.
Again, purely speculation, but if that R&D didn't result in usable product, maybe Apple isn't "all-in" on sapphire for iPhone display covers after all. Perhaps at the required size and thickness, sapphire is too brittle, and maybe the resilience of Gorilla Glass makes it a more suitable material for that application. Kudos to them for trying.
Sapphire may work out perfectly in a display the size of the
WATCH, and i'm sure there are several other sapphire manufacturers Apple could choose from, since sapphire in that size is already commonplace in the watch industry.
Bring the jobs back to America they say.
It's not the average employees that make it the problem, it's the management.
You always hear "Americans don't want to do thy type of work", which is bs.
Greed.
Not so bad
Maybe this isn't as evil as it looks.
Sure, the GT CEO made out OK, but these dollar amounts aren't unheard of for a CEO.
Apple was able to experiment with the idea of using an advanced technology in an innovative way - without taking a big PR hit. Apple could've been the hero, but only GT could become the goat.
Apple avoided most of the embarrassment. It was GT who couldn't meet the quantity and/or quality demands. So GT ran the experiment for Apple, on Apple's money.
Apple learned what they needed to know for a reasonable price. They may have learned more about sapphire than we'll ever realize. Yet they'll still get back a fair portion of their loans. They knew this had a reasonable chance of failure, so a volume purchase commitment would have been much more costly and risky.
The only shame is that GT was a viable company before the deal, and about 700 people lost their new jobs. But they lost them trying to do something worthwhile. Trying and failing is what life's about. Eventually they'll succeed - perhaps the very next time they try.
Maybe this isn't as evil as it looks.
Sure, the GT CEO made out OK, but these dollar amounts aren't unheard of for a CEO.
Apple was able to experiment with the idea of using an advanced technology in an innovative way - without taking a big PR hit. Apple could've been the hero, but only GT could become the goat.
Apple avoided most of the embarrassment. It was GT who couldn't meet the quantity and/or quality demands. So GT ran the experiment for Apple, on Apple's money.
Apple learned what they needed to know for a reasonable price. They may have learned more about sapphire than we'll ever realize. Yet they'll still get back a fair portion of their loans. They knew this had a reasonable chance of failure, so a volume purchase commitment would have been much more costly and risky.
The only shame is that GT was a viable company before the deal, and about 700 people lost their new jobs. But they lost them trying to do something worthwhile. Trying and failing is what life's about. Eventually they'll succeed - perhaps the very next time they try.
So the GTA higher-ups convince Apple they can get the job done.
Apple loans them nearly half-a-billion-dollars.
Shortly after that the higher-ups at GTA sell off stock at a high value.
The same year GTA doesn't live up to the contract they agreed to with Apple and file bankruptcy.
GTA provides nothing to Apple.
GTA is going to sell off the equipment that Apple paid for with the loan and hopefully give Apple nearly all back (but probably not).
GTA employees in Arizona lose their jobs.
Higher-ups at GTA end up with a lot of money from stock sells before this went south.
Am I getting this correct here? Summarized of course. This all seems shady that everyone loses in this deal but the people responsible for making the contract parameters succeed and they come out ahead.
Apple loans them nearly half-a-billion-dollars.
Shortly after that the higher-ups at GTA sell off stock at a high value.
The same year GTA doesn't live up to the contract they agreed to with Apple and file bankruptcy.
GTA provides nothing to Apple.
GTA is going to sell off the equipment that Apple paid for with the loan and hopefully give Apple nearly all back (but probably not).
GTA employees in Arizona lose their jobs.
Higher-ups at GTA end up with a lot of money from stock sells before this went south.
Am I getting this correct here? Summarized of course. This all seems shady that everyone loses in this deal but the people responsible for making the contract parameters succeed and they come out ahead.
Yep, I think even Apple has mentioned this before, its not just the cost but the amount of hoops you have to jump through to get even something started let alone finished makings it a big challenge to manufacture at scale in the U.S
Plot twist: Apple will be buying GT's furnaces so they can pay their debt to Apple. This was planned all along so Apple could get their own sapphire furnaces at a discount. (implying GT can pay up the difference though, which I doubt they can)
How many watches will they sell?
Keep in mind one more thing: like many of us, Apple realized that their Watch was a big risk. It may be difficult to get people to put watches back on their wrists after they've adapted to using pocket watches again (their cell phones). And since Apple's smart-watches aren't even stand-alone devices, the Apple Watch is an especially hard sell.
The Apple Watch had a lukewarm reception in the press. Then GT declared bankruptcy. If Watch demand had been great, Apple could have made another payment to GT, and GT could have provided the necessary capacity. So GT was a safety net. Since Apple won't release their Watch until next year, they still have plenty of time to procure the necessary materials from other sources.
Keep in mind one more thing: like many of us, Apple realized that their Watch was a big risk. It may be difficult to get people to put watches back on their wrists after they've adapted to using pocket watches again (their cell phones). And since Apple's smart-watches aren't even stand-alone devices, the Apple Watch is an especially hard sell.
The Apple Watch had a lukewarm reception in the press. Then GT declared bankruptcy. If Watch demand had been great, Apple could have made another payment to GT, and GT could have provided the necessary capacity. So GT was a safety net. Since Apple won't release their Watch until next year, they still have plenty of time to procure the necessary materials from other sources.
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I think the A9 is more likely for the iPhone 6s. Probably a significant camera upgrade (OIS?), but what comes then...audio by Beats maybe???
Bad news for the company. Good news for the senior management who sold the stock which saw appreciation solely because of the contract with Apple and not because of their prior competency in anyway.
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Err worst decision would be to hire the very same people who couldn't delivery. They going to an Asian supplier simple as that.
I can agree with everything except #1. It's a liquidation sale. If they get 30-40% of the value of the kilns they will be lucky. Liquidation is typically pennies on the dollar.
It's interesting that Apple appears to be abandoning sapphire for now. Corning must be pleased. Maybe Samsung will buy the furnaces.
Reportedly Samsung looked into sapphire when the Apple rumors hit, and rejected it as too expensive and not durable enough for mass production phones.
Hmm. I wonder if Apple got a deal on Gorilla Glass ahead of time because of the iPhone sapphire rumors, or if they had to scramble at the last minute and pay more.
Around $300 to $400K apiece. Supposedly Apple had an exclusive for GTAT's biggest furnaces (200 kg boules vs 115-165 kg for other buyers), so use the high end of that.