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Original poster
Apr 12, 2001
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Apple and GT Advanced fought to keep key documents related to their sapphire agreement out of the public eye after the latter company filed for Chapter 11 Bankruptcy protection, but earlier this week, a judge ruled that the documents did not contain trade secrets or confidential information, and would thus be largely unsealed.

As of today, those previously sealed documents are now available for public inspection, including an unedited affidavit [PDF] from GT Advanced COO Daniel Squiller. Squiller submitted a revised affidavit on October 28, which gave some insight into the deal between Apple and GT Advanced, but the newly available unedited version expresses much stronger negative feelings towards the partnership and places more of the blame for GT's failure on Apple.

gt_advanced_logo.jpg
According to Squiller, Apple used a "bait-and-switch" strategy, offering GT Advanced "an onerous and massively one-sided deal" in 2013. He says that Apple initially drew GT in with the promise of a huge deal, originally agreeing to purchase sapphire furnaces and let GT operate them, but eventually demanding a "fundamentally different deal" requiring GT to purchase the furnaces itself.
The new structure, as a contract matter, shifted all economic risk to GTAT, because Apple would act as a lender and would have no obligation to purchase any sapphire furnaces, nor did it have any obligation to purchase any sapphire material produced by GTAT.
GT gave into Apple's new terms because it had "invested months negotiating a sale contract with Apple while being effectively locked out of pursuing other opportunities with Apple's competitors." During "extensive and all-consuming" negotiations with Apple, GT ceased speaking to other companies about its furnaces due to the lure of Apple's large offer.

Apple reportedly told GT not to bother attempting to negotiate because it "does not negotiate with its suppliers." GT was required to agree to all of Apple's terms or risk losing the deal, and as has been previously noted, the contract was highly favorable to Apple, requiring GT to produce sapphire that Apple was not obligated to buy. Squiller alleges that when GT execs balked at the terms, Apple said "Put on your big boy pants and accept the agreement."

As Squiller previously described, the company's relationship with Apple became "unsustainable" after Apple refused to take responsibility for cost overruns and expenses that it caused due to its control over operations. Apple also reportedly selected fabrication equipment that "could not economically produce a product that Apple would accept" and then refused to permit equipment changes that would allow the company to produce an acceptable product.

Squiller accuses Apple of "embedding" itself in GT's operations so deeply that GT was forced to "divert an inordinate amount of its cash and corporate resources" into the Mesa facility, affecting GT's continued viability as a whole.

Apple, in documents asking that Squiller's affidavit remain sealed, said his statements were "untrue, irrelevant and defamatory," stating that Squiller's declaration "goes far beyond what was reasonably necessary to describe the Debtors' current financial situation and instead includes gratuitous characterizations of Apple's motives, negotiating tactics and business practices."

Apple and GT Advanced have already reached an agreement to officially end their partnership, nullifying the terms of the original deal. Under the terms, GT will repay its loans to Apple by selling off its sapphire furnaces, and it has already begun shutting down its Mesa, Arizona plant and laying off employees.

Article Link: GT Advanced COO: Apple Told Us 'Put On Your Big Boy Pants and Accept the Agreement'
 

citi

macrumors 65816
May 2, 2006
1,363
508
Simi Valley, CA
If you didn't like the terms, don't sign the contract. I'm really tired of people acting like they were forced into situations. Unless they have proof that Apple literally put a gun to their heads, stop crying.
 

AdonisSMU

macrumors 604
Oct 23, 2010
6,896
2,477
Then don't sign the agreement. Big deals take along time. No one is just going to give you their money without adequate protections in place.
 

KdParker

macrumors 601
Oct 1, 2010
4,793
998
Everywhere
As a supplier of Apple, they had to know the balance of power was with Apple when they signed the agreement.

If the deal wasn't going to benefit the GT Advances in the long run they could have opted out.

They gambled and lost is what this looks like to me.
 

Darrin Bell

macrumors regular
Jun 30, 2003
114
74
Los Angeles
What were they thinking?

Hadn't they ever heard "don't put all your eggs in one basket?" I'm about as far from the corporate world as you can get, so forgive me if this sounds simplistic: but isn't it unwise to limit yourself to one customer, no matter what they're offering you, unless they purchase your company?
 

yablochnik

macrumors newbie
Jun 29, 2013
22
0
Yeah, we all know Apple I tough to do business with given their size and power, but GT's officials sound more and more like a kid who is complaining to his mum about a bully in school.
 

leman

macrumors P6
Oct 14, 2008
15,396
12,147
Yeah, Apple is ruthless, tell us something new. All I get from this article is that GT Advanced's leadership was incompetent at politics.
 

tpouliot

macrumors member
Aug 29, 2007
63
0
Good gravy. If this is even close to true, it looks like Apple ran these guys into the ground.

I am not sure Apple signed the contract, GT executives did...they could have walked away from the deal if they wanted to.

I am sure everyone wants a piece of Apple's supply chain, and knowing it's Apple, you expect them to buy a lot due to demand. However, there are always business risks you need to evaluate no bad how you want to have Apple or any other client as a customer.
 

dodgertodd

macrumors newbie
Feb 25, 2012
2
0
Provo, UT
Put on your big boy pants, indeed

What pathetic whining. I hate GTAT more and more every day. Apple didn't force you to do a damn thing. You didn't have to agree to anything. You signed the contract and then you failed to deliver. This is really making me sick.
 

TMay

macrumors 68000
Dec 24, 2001
1,520
1
Carson City, NV
Good gravy. If this is even close to true, it looks like Apple ran these guys into the ground.

Or maybe, GT Advanced was in such a weak financial position because it's other businesses were suffering, and it wanted to take the deal even with the terms Apple gave them.

Looks to me like GT Advanced was a bankruptcy waiting to happen. Apple gave them a chance for a Hail Mary and they dropped the ball. Tough.
 

Jason McAndrews

macrumors member
Aug 29, 2014
32
37
Whether Apple was playing hardball or not is inconsequential. GT could have said no at any point before they signed the agreement. I refuse to feel bad for poor GT because their executives didn't have the sense to walk away when it was becoming obvious to them it wasn't a deal that was in the best interest of their company. Instead the executives seemed to have just saw dollar signs and lacked the self control to do their job and make decisions based on the facts in front of them. GT got in over their heads, plain and simple.
 

Daalseth

macrumors 6502a
Jun 16, 2012
580
258
GT ceased speaking to other companies about its furnaces due to the lure of Apple's large offer.

In other words GT was blinded by greed and signed a bad deal.

I still suspect that when everything comes out it will be clear that Apple was the victim. I strongly suspect that GT executives knew they couldn't make the deal work but signed it and promised Apple the moon in order to pump GT stock. Then they dumped their holdings just before the S hit the F.
 

lightmyway

macrumors member
Jan 11, 2007
91
102
Looks like they pooped the bed instead of putting on their big boy pants.

Companies can't have it both ways – they can be suppliers for the big guns (this story reminds me a bit of Wal-Mart's practices, in a good way), or focus on smaller ones. Both approaches to business are valid. But you can't set out to do it one way and then cry when you can't rise to the standard and the terms you've agreed to.
 

Cyberius11

macrumors 6502
Oct 20, 2011
321
136
What's unfortunate is that incompetent management cost many workers their jobs - income, insurance benefits, etc.

Every competent leader knows that you do not put all of your companies eggs in one basket. While you're hunting the elephant, you have to catch the deer and the rabbits to bring in enough to keep yourself fed. Then when you land the big contract, you're better than ever. To let the company go under while targeting one agreement is sheer incompetence, Apple didn't force anyone to sign anything.
 

cashxx

macrumors member
Sep 14, 2010
66
110
So the CEO, COO or whoever doesn't know how to negotiate! Sounds like they shouldn't have been in that position and never have that title again if they can't handle it.
 
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