GT Advanced COO Blames Apple's Strict Sapphire Contract Terms for Bankruptcy Filing

[ybz90]

I wonder how much this has to do with Apple's China mentality and being able to make insane demands on contractors. In China, I think it's more likely the government would help the business to succeed. I don't know if it's still the case, but in the past they protected nascent industries.

Isn't Apple rich enough? Like seriously who creates possible fines of $300,000.

This has nothing to do with "China mentality". Apple actually has one of the best records in the industry with regards to contractors.

In this particular case, I don't think the demands Apple made on GT were "insane" at all. Remember, Apple threw down half a billion dollars to buy them a facility to use and equipment. GT didn't have to front that overhead. If you were investing that much money in a company, wouldn't you make sure you had appropriate oversight over said company?

Besides, as others have noted, it's absurd to cry foul after the fact. If the GT execs found the contract so burdensome, they shouldn't have signed it in the first place.

 

[aajeevlin]

I know that everyone will get on GTAT's back about this, but I respect his point. Apple has billions upon billions of dollars, they don't. GTAT took a chance, and failed. It should be respected that they tried.

This is also a loss for Apple. Obviously, Apple wanted this work done, and they wanted the expertise that GTAT had. Perhaps if Apple was not as heavy handed with the contract terms, this would have worked out for all.

It's not necessary for Apple to flex its corporate muscle all the time. Sometimes it can backfire.

That's fine and all, and sure we will respect GT for taking a chance. But it was GT that signed the agreement and all. So when things failed you just turn around and blame the other party for it? I'm not okay what that.

 

[iLondoner]

GTAT either misrepresented themselves to Apple, or their decision makers weren't listening to their engineers about what was possible or made sense.

Couldn't agree more!

 

[knemonic]

Then why the heck did you sign it!?

 

[OldSchoolMacGuy]

Pretty sure that GT Advanced agreed to the terms. Apple didn't put a gun to their head and make them sign the contract.

 

[usarioclave]

Where did all the sapphire go?

 

[RickInHouston]

That's it, put the blame on someone else.

Sounds familiar, doesn't it.

 

[paul4339]

Isn't Apple rich enough? Like seriously who creates possible fines of $300,000.

Because Apple has commitments to keep as well. They are releasing a product on a specific date to buyers around the world, they must make sure that all the parts are available and the manufacturing, shipping, etc are all on time... if one parts supplier slips, the it messes up the schedules and contractual agreements of everyone downstream (you'd have factories people in china sitting around waiting for a missing part).

.

 

[kironin]

Apple reportedly decided it was too expensive to provide backup power for the furnaces and on multiple occasions, power interruptions led to delays and loss of sapphire boules. GT Advanced was also not in charge of the sapphire cutting tools that it received, and in his affidavit, the COO says that the tools did not "meet their performance and reliability specifications."

If true, someone's head in the Apple corporate hierarchy should roll. Not providing backup power is just incredibly short-sighted.

 

[centauratlas]

This. Someone orders a truck, they don't accept a car or a motorcycle.

To me it sounds like Apple was quite skeptical about GTAT's ability to perform the contract, GTAT said "no problem, we can do it" and so Apple said, "okay, then you shouldn't have any problems with the terms since they'll never have to be used since you can do it." Then GTAT didn't perform, couldn't meet the terms, and was screwed.

Of course it was highly favorable to Apple. Apple paid for it.

If the COO of GT thought it was the strict contract why did he sign it ?

 

[roland.g]

While he and the CEO make millions dumping the stock.

 

[Porco]

"contract noun |ˈkɒntrakt |
a written or spoken agreement, especially one concerning employment, sales, or tenancy, that is intended to be enforceable by law"

If you make this sapphire stuff for us we will give you money. It'll be tricky though, are you sure you can do it?
GT-Yeah! We can do it! Yeah! we can do it!
Great, here's some money.
GT-Yeah! We are doing it! Yeah! It's going great!
Nice. here's some more money.
GT-Ermm.. it's getting tricky…
That's a shame. No more money then.
GT-Oh dear, we can't manage what we said we could...
Disappointing. Oh well. No more money then.
GT-Pretty Please?
No.
GT-Oh, now we have no money and it's ALL YOUR FAULT!!.
srsly?

 

[FieldingMellish]

It's the horrible Apple lawyers, redirecting their cold stares and barbs from Apple's foes and redirecting them toward Apple's partners.

 

[Jason83]

Did I misread the article the other day that stated part of the agreement between Apple and GT settling was GT must quit publicly blaming Apple for their own ineptitude?

 

[jonathan1683]

Samsung paid the ceo off to make it not happen and then he dumped the stock and made more money. Smart man. The workers are the only ones that suffer.

 

[hsotnicam8002]

So they HAD to sign that contract? They saw diamonds but the reality was ... sapphire.

 

[FieldingMellish]

Pretty sure that GT Advanced agreed to the terms. Apple didn't put a gun to their head and make them sign the contract.

Apple online led them to a huge scrolling massive amount of pages that had an "agree" button at the very top. Just like when we get new terms regarding iTunes or iCloud.

 

[Kabeyun]

So someone was forcing GT to sign with Apple? Squiller's kid was held captive?

They signed because they wanted gobs of money Apple had, and then failed to do what in their money-addled state of mind they thought/said they could do. Not the first time a corporation bit off more than it could chew.

Don't like the terms, don't sign the contract. I only feel for the out-of-workforce.

 

[CFreymarc]

No matter how much money they have, you never let your customers run your business. Take their products needs, then manage your own shop to get the product to them.

If Apple had so many fingers into their operation already, why didn't they just buy them outright as they did their key semiconductor and other material suppliers?

 

[Kariya]

If the COO of GT thought it was the strict contract why did he sign it ?

Yeah this is the question. Why sign?

 

[CFreymarc]

It's the horrible Apple lawyers, redirecting their cold stares and barbs from Apple's foes and redirecting them toward Apple's partners.

Know several that had showdowns with Apple legal and they ended up walking out finding better deals elsewhere.

 

[coolfactor]

lol yes but pretty sure tons of lawyers on both side read the agreement. Apple is like Walmart of IT world. They can and will ask for ridiculous things and will get away with it from their suppliers.

Both parties are to blame here.

Apple is not at fault. It was GTAT's responsibility to *negotiate* the terms that worked of their company, as well. There should've been clauses requiring Apple to provide backup power, and clauses stating the minimum requirements for cutting tools.

The comments made by GTAT executive "blaming Apple" have a strong odour of childish "kicking and screaming", and Apple is clearly taking the stance of the calm parent that refuses to respond to that silly behaviour.

 

[CFreymarc]

Where did all the sapphire go?

Odds are to an industrial scrap dealer for pennies on the dollar. This is a common liquidation practice of companies in bankruptcy.

 

[mdlooker]

Was there any compromise between he and Apple?

Boy I wish I were his car salesperson and realtor!!

 

[coolfactor]

Samsung paid the ceo off to make it not happen and then he dumped the stock and made more money. Smart man. The workers are the only ones that suffer.

I've had that thought all along... that some Apple competitor was behind the souring of this deal. It's possible.