Apple and GT Advanced Reach Settlement on Remaining Sapphire Debt

[MacRumors]

Apple and its former sapphire supplier GT Advanced have reached an agreement that will allow GT Advanced to absolve itself of the remaining $439 million that it owes Apple, reports The Wall Street Journal.

Under the settlement, GT Advanced will host an auction on November 23 to get rid of the equipment that it contributed to the sapphire making process, with the proceeds being split between the two companies. Equipment that does not sell during the auction will be given to Apple.

While GT intends to hang on to some of the equipment--as many as 600 sapphire-making furnaces--it is prepared to auction what it can and abandon what it can't cart off, court papers say.

Anything not sold will be handed over to Apple, which has agreed to scrap the equipment and extinguish the loan it made to transform GT from an equipment manufacturer into a supplier of smartphone-screen material.

Following the dissolution of the relationship between GT Advanced and Apple, GT Advanced agreed to sell off its sapphire furnaces to repay the loan Apple had provided to buy the equipment in the first place. Over the course of the past year, GT Advanced has been unable to find a buyer for the sapphire furnaces.

GT Advanced and Apple originally partnered up to produce sapphire displays for the iPhone 6 and the iPhone 6s Plus, but the deal soured when GT Advanced was unable to meet deadlines and produce sapphire that met Apple's standards. GT Advanced filed for bankruptcy in October of 2014, laying off more than 700 employees and shuttering the Mesa, Arizona factory, which Apple is repurposing as a data center.

Apple and GT Advanced's new agreement is set to be finalized following the approval of a bankruptcy judge.

Article Link: Apple and GT Advanced Reach Settlement on Remaining Sapphire Debt

 

[Barry Bishop]

Still lost a lot of money from this! I still have those nickel shares for some stupid reason

 

[iLoveiTunes]

ah, so finally they DID put their big boy pants on

 

[keysofanxiety]

I always thought GT's bankruptcy was a bit of a charade, so that Apple could eventually buy their company on the cheap and control their own sapphire plant/margins in the long term.

Well. How wrong I was.

 

[madKIR]

So they gave them the money to buy the equipment, so they could get it back by making them bankrupt? LOL

 

[Gasu E.]

I always thought GT's bankruptcy was a bit of a charade, so that Apple could eventually buy their company on the cheap and control their own sapphire plant/margins in the long term.

Well. How wrong I was.

If I understand you correctly, that would be unethical. And if so, it would make other smaller companies wary of partnering with Apple in the future. Not worth it for Apple at all.

 

[madKIR]

I always thought GT's bankruptcy was a bit of a charade, so that Apple could eventually buy their company on the cheap and control their own sapphire plant/margins in the long term.

Well. How wrong I was.

So they gave them the money to buy the equipment, so they could get it back by making them bankrupt? LOL

 

[Benjamin Frost]

Remember when we were all hoping for sapphire iPhone screens and liquid metal frames?

All gone to dust. I guess it's all aluminium for the foreseeable future. I wonder if we might see a return to a glass back like the iPhone 4? It was such a fine design.

 

[Spink10]

Remember when we were all hoping for sapphire iPhone screens and liquid metal frames?

All gone to dust. I guess it's all aluminium for the foreseeable future. I wonder if we might see a return to a glass back like the iPhone 4? It was such a fine design.

Heavy and fragile - doubt it. Doesn't seem the way Apple is / has been going.

 

[Robert.Walter]

The sooner Apple can be free of this Giftzwerg Technologies Co. the better!

 

[MacConvert07]

Still seems like a shame to me! All those months of rumors and then, nothing. Maybe there's still part of this story that we aren't seeing. Isn't it possible apple is not the bad guy here? If I were GT and had a good thing going that apple wanted, I'd probably get into a contract with them too, regardless of whether I really knew if I could deliver. My speculation is that they got excited, hoped they could "pull it off" and they couldn't. This is capitalism. This is one of the tragic realities in free market. We're free to make money and free to lose it.

 

[furi0usbee]

The deal that keeps on giving. NOt.

 

[cdmoore74]

Way off topic but after seeing the Droid Turbo 2 survive multiple drops under 10 feet and 3 huge drops from 50 feet with no damage to the display (other than scratches to the replaceable external protector) is there still a need for sapphire displays?
I was throughly impressed and believe that all phones will go that route.

 

[NY Guitarist]

Still a huge mess.

 

[rdlink]

Remember when we were all hoping for sapphire iPhone screens and liquid metal frames?

All gone to dust. I guess it's all aluminium for the foreseeable future. I wonder if we might see a return to a glass back like the iPhone 4? It was such a fine design.

It was at that. I owned the 4 and the 4S, and I thought it was a beautiful design. Still do. If they offered it with today's technology I would still have one.

Still seems like a shame to me! All those months of rumors and then, nothing. Maybe there's still part of this story that we aren't seeing. Isn't it possible apple is not the bad guy here? If I were GT and had a good thing going that apple wanted, I'd probably get into a contract with them too, regardless of whether I really knew if I could deliver. My speculation is that they got excited, hoped they could "pull it off" and they couldn't. This is capitalism. This is one of the tragic realities in free market. We're free to make money and free to lose it.

I'm not sure why you would imply that Apple was "the bad guy." They entered into a business agreement with a company to deliver a product. They even underwrote their expansion. The company never delivered the agreed product, so they terminated the deal. Pretty clear cut and reasonable approach to the situation.

The only tragedy here is the apparent issue with the GT board members getting rich while their company dissolved and 700 employees ended up unemployed.

 

[SteveBlobs]

What about the CEO that sold all his stock right before the company went under? That guy got away with murder and the FTC should step up its enforcement.

 

[SteveBlobs]

Remember when we were all hoping for sapphire iPhone screens and liquid metal frames?

All gone to dust. I guess it's all aluminium for the foreseeable future. I wonder if we might see a return to a glass back like the iPhone 4? It was such a fine design.

I loved the all glass iPhone 4 and 4s. I also liked my phone better without curves.

 

[omnimoeish]

Apple is just going to literally scrap these? Interesting. There's more to this story. Somewhere along the lines Apple thought this process would work and at this point it sounds like they got duped or something. I mean if it were just a matter of needing more time and money than GT Advanced had been given, you'd think Apple would've bought the company or found a way to hire on their engineers and bought the furnaces. But they're just scrapping them...

 

[Jiz]

Do these ovens actually work when operated correctly I'm wondering?
Who is buying them. Will they succeed?

 

[bergert]

My speculation is that they got excited, hoped they could "pull it off" and they couldn't. This is capitalism. This is one of the tragic realities in free market. We're free to make money and free to lose it.

This is economy 101: If you want to have a new technology for the 50 million iPhones sold in a quarter; you need to invest $500 million - and it may not work out. But without taking calculated risks, there is no progress. We'd all be still using blackberry keyboards ...

 

[mw360]

What about the CEO that sold all his stock right before the company went under? That guy got away with murder and the FTC should step up its enforcement.

Nobody cares, because that was just a conspiracy theory concocted by internet commentators operating on half-facts and ignorance. The FTC usually works differently.

 

[2457282]

I do have a sapphire screen on my Apple Watch. I wonder if Apple has any plans left to bring it to the iPhone.

 

[69Mustang]

Apple is just going to literally scrap these? Interesting. There's more to this story. Somewhere along the lines Apple thought this process would work and at this point it sounds like they got duped or something. I mean if it were just a matter of needing more time and money than GT Advanced had been given, you'd think Apple would've bought the company or found a way to hire on their engineers and bought the furnaces. But they're just scrapping them...

GT's furnaces had questionable efficacy before they got with Apple. Also their technique for producing extremely large boules was flawed and had a horrible yield. There would be no reason for Apple to keep equipment that doesn't work. Unfortunately, that means they don't need the engineers that couldn't make the process work. That whole debacle was just a sad deal all the way around. Well, 'cept for the GT management that cashed out.

I do have a sapphire screen on my Apple Watch. I wonder if Apple has any plans left to bring it to the iPhone.

Sapphire screens for watches is a tried and true tech. Getting someone to produce volume yield on large sheets...
By the time they could make sapphire a viable product, Apple and the rest of the industry most likely will have moved on to better ideas. Not saying it's better, but look at that screen on the Droid Turbo2. Sapphire's day as a phone screen has past in my opinion.

 

[2457282]

Sapphire screens for watches is a tried and true tech. Getting someone to produce volume yield on large sheets...
By the time they could make sapphire a viable product, Apple and the rest of the industry most likely will have moved on to better ideas. Not saying it's better, but look at that screen on the Droid Turbo2. Sapphire's day as a phone screen has past in my opinion.

I know everyone is talking about the Droid Turbo2 and the videos where it does not shatter even after being dropped. AWESOME. But maybe I missed it but how is it in terms of scratch resistance?

I have had each and every iphone and I have never dropped my phone to the point where it cracked or broke, but I have had scratch issues, so for me that is a higher priority. And in this vein, I do not think that sapphire is passe, since I know of nothing that is better.

 

[Rocketman]

I don't know all the details about the process and the deal of course, but in general terms it appears they did prototyping that convinced Apple scaling would work. They scaled and it did not work. There was cracking to the extent the yield was quite bad. There appeared to be no solution despite effort.

When GT filed BK they took advantage of the code as Trump often says, to stay in business, reorganize and legally stiff Apple on the loan.

Apple is being somewhat magnanimous by agreeing to extinguish the loan WHILE GT maintains hundreds of furnaces. I suspect Apple wants to give GT a chance at a second bite at the apple so to speak.

In the current term Apple gets a large tax write off, and by scrapping the remainder of the unsold equipment and fixtures they get more tax advantages for that as well.

It is a relatively friendly separation as BK goes.

Rocketman