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Apple Withheld $139 Million Payment from GT Advanced Ahead of Bankruptcy Filing

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macrumors bot
Original poster
Apr 12, 2001
65,677
34,295



gt_sapphire_furnace-250x387.jpg
Apple withheld a final $139 million payment that it was due to make to GT Advanced, reports The Wall Street Journal, which may have contributed to the company's decision to file for Chapter 11 bankruptcy. GT also reportedly burned through cash, spending $248 million in one quarter.
That may have led to the company's filing, since its cash, at $85 million, was below a $125 million trigger point that would allow Apple to demand repayment of about $440 million in loans it had advanced. Apple had agreed to lend GT a total of $578 million to help get a large sapphire factory in Arizona up and running. The tech giant reportedly withheld the last $139 million payment it was due to make, although it isn't clear why.

What is obvious is that GT effectively bet the house on a new technology with a new business model and made itself dependent on a single customer--Apple.
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Though it is not known why Apple withheld the final $139 million payment, Apple's $578 million loan to GT Advanced was subjected to certain capacity requirements that the sapphire company may not have been able to meet. According to GT Advanced's own filings, it may have had issues with poor sapphire yield rates.

Apple and GT Advanced first struck a deal in late 2013, and along with a $578 million loan for purchasing equipment, Apple also constructed a 700-employee manufacturing facility in Mesa, Arizona, which is run by GT Advanced.

While Apple was widely expected to include sapphire display covers from GT Advanced on some iPhone 6 models, that did not end up happening. Despite purchasing a facility for GT and lending it money to buy equipment, Apple was under no obligation to purchase GT's sapphire. GT was, however, subjected to "exclusivity provisions" that limited what it could sell to other companies.

Though GT Advanced has filed for Chapter 11 bankruptcy, GT Advanced's CEO promised the company would continue operations as it went though a transitional phase to reorganize its business.

GT Advanced will have its first Chapter 11 bankruptcy court hearing on Thursday, October 9 in New Hampshire, where it is expected to explain what caused its bankruptcy filing.

(Image: GT sapphire furnace)

Article Link: Apple Withheld $139 Million Payment from GT Advanced Ahead of Bankruptcy Filing
 
Article Link
https://www.macrumors.com/2014/10/07/apple-withheld-139-million-from-gt/
T

tito2020

macrumors 6502a
Oct 16, 2011
865
295
sapphire is very hard to find you have pay a lot of miners to get that much quantity apple wanted.
 
M

mrjr101

macrumors regular
Jul 29, 2013
103
10
Ahhhh thats why:

1. No Saphire this round
2. CEO cashes Out
3. Chapter 11
 
W

wilhoitm

macrumors 6502a
Jul 22, 2002
895
1,080
goobot said:
Apple did apparently return a lot of sapphire sooooo.
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I can see Samesung paying GT the last $139 million just to spite Apple. Apple has already invested $439 million of the total 578 million! Does Samesung use sapphire? :eek:
 
W

wilhoitm

macrumors 6502a
Jul 22, 2002
895
1,080
Mike Oxard said:
I know, and it must be a bugger to find stones big enough to make phone screens with.
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With the quantities of iPhone 6 sold is there that much Sapphire on the planet? Doesn't the iPhone 6 Plus require a huge sapphire nugget?
 
E

ethanwa79

macrumors 6502
Sep 13, 2014
446
1,723
GT Advanced over promised and under delivered all for the sake of the Apple money and hype. Pretty simple to see that.

Here's a business tip: Don't say you can do something until you KNOW you can do it.

Here me Coin and Plastc?
 
SockRolid

SockRolid

macrumors 68000
Jan 5, 2010
1,560
118
Almost Rock Solid
mattopotamus

mattopotamus

macrumors G5
Jun 12, 2012
14,738
6,108
iLoveiTunes said:
Lets try and spin this against :apple: somehow.
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They did sign an exclusivity deal with apple that they were 100% banking on. Granted that is their own fault for doing that deal, but they would have never lifted off without help from apple. They made them and broke them at the same time.
 
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