Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
GT Advanced COO Blames Apple's Strict Sapphire Contract Terms for Bankruptcy Filing
- Thread starter MacRumors
- Start date
- Sort by reaction score
To be fair they would have just bought the company if they had high expectations for it, $500 million, I hate to say it, but it's really just pocket change for Apple.
----------
Wouldn't you want to be manufacturing for one of the biggest electronic companies in the world?
And Apple was dumb enough to give $500 million to a company that couldn't come close to doing what Apple required. Apple has the most egg on it's face in this venture.
People who understand that contracts are designed to be met and protect their money. If there were no repercussions to a contract what incentives do you have to actually keep up your end?
I don't think he's saying it's all Apple fault - he merely points out that some of the bad decisions were made on Apple's side as well. In this forum though people live in a bubble where everything Apple makes and does is perfect.
I don't understand why everyone is blaming GT for this.
GT needed business badly enough, evidently, that they were willing to accept such draconian terms.
I'm personally a bit shocked that Apple wrote up such terms - what on earth did they think the end result would be? There was some chance that GT would work out, but most likely GT would break and Apple would be left with nothing. There was no possibility of a middle ground where GT wouldn't quite deliver the exact materials on the exact date at the exact price point, but they would be within tolerance on all three.
GT needed business badly enough, evidently, that they were willing to accept such draconian terms.
I'm personally a bit shocked that Apple wrote up such terms - what on earth did they think the end result would be? There was some chance that GT would work out, but most likely GT would break and Apple would be left with nothing. There was no possibility of a middle ground where GT wouldn't quite deliver the exact materials on the exact date at the exact price point, but they would be within tolerance on all three.
And then they hired a budget lawyer that didn't read it and just clicked accept. I see. So it was Apple's fault they signed the contract which agreed to these things, not their own.
Easy common sense is at play. They had not problem taking the money. I am sure they didn't balk at the amount of money coming their way at the time of signing.
This is like buying a car you aren't sure you can afford, then getting mad at the bank for approving the loan and charging you crazy late payments... You'd think with half a billi on the table, there'd be a more logical approach/analysis of your companies capabilities... This COO is a moron
Because of a stock boost. The company may have gone under, but many people made a killing on the announcement of them becoming an Apple supplier.
I'm waiting for the other shoe to drop on the word of a SEC investigation.
About the only one coming out clean on this one is Corning and their "I told you so!" attitude they are keeping to themselves to just close the deal on the current and next generation of Apple products.
Corning has been doing transparent materials research for almost a century. They have pioneered some of the first structural and super-hard glass materials.
No doubt they have been messing with sapphire-based transparent materials for a while. I am sure they have a good reason not taking this deal.
When you are borrowing 1/2 billion, you read the contract, every, single, word. And then you hire lawyers and they read every, single, word. Only an idiot wouldn't read such a contract. Or a CEO planning to dump stock when it suited him.
Well why was the contract signed by GT Advanced in the first place if the COO thought it was too strict? It's not Apple's fault that GT went bankrupt. That's like blaming your mortgage company because you can't make your monthly mortgage payment, even though you signed a contract that you could.
GT should have never accepted such a 1-sided contract unless they knew they could deliver.
They did not, and they deserve everything coming to them.
They did not, and they deserve everything coming to them.
Alternative headlines
GT Advanced COO Not Forced to Sign Contract; Blames Self For Claiming They Could MEET Strict Terms
or:
CT Advanced COO Claimed They Could Deliver for Certain When It Was Actually a Gamble; Took Apple's Money Anyway and Now Wants to Pass Blame
GT Advanced COO Not Forced to Sign Contract; Blames Self For Claiming They Could MEET Strict Terms
or:
CT Advanced COO Claimed They Could Deliver for Certain When It Was Actually a Gamble; Took Apple's Money Anyway and Now Wants to Pass Blame
It's wasn't a bad contract; it was strict/tough and turned out to be negative for GT Advanced because they couldn't meet deadlines but the contract was sound.
GT was excited that they were signing on with Apple and thought they were going to ride the wave to massive profits. Apple thought they had a deal with a supplier that they mostly controlled and had the inside track on the hottest new material.
Unfortunately, both companies grossly underestimated the level of effort and resources required to manufacture the material. GT is bankrupt, Apple doesn't have the sapphire parts they required, and 800 people lost their jobs.
Everyone lost in this deal.
This seems like a case of sour grapes given that GTAT wasn't able to perform it's contractual obligations which it signed on to. Having said that, there are always two sides to every story. Sometimes small companies have difficulty expanding quickly and maintaining production goals to meet a purchaser's requirements. Apple is well experienced in parts shortages and probably was attempting to mitigate that risk.
Contracts are written by human beings and therefore are inherently fallible. I'm sure both parties bear some responsibility.
Contracts are written by human beings and therefore are inherently fallible. I'm sure both parties bear some responsibility.
Legalistically, no - agreed. It's really a stretch of the word "partner" though, and Apple clearly is in a position to have been a little softer on their smaller "partner." Moralistically, therefore, it's a bit difficult to absolve Apple of *all* blame...
Exactly. Not "bad," just "tough."
Not sure that this is more of Apple flexing their corporate might or GT over promising. This agreement was signed at some point and obvisously they couldn't meet the timelines stated.
You mean if Apple had been nicer with the contract terms, the sapphire production would have worked as expected?
Apple wanted a product. Their own production depended on it, so they had to work that dependency into the contract as penalties. How is that heavy-handed?
Whenever there is a product release by Apple, people complain that there are not sufficient supplies. Many even claim that Apple is limiting the supplies on purpose, or they are claiming Apple is just too stupid, stating that they should just build more factories - because that is sooo easy. Do you think these same people will understand if a new iPhone is delayed by half a year, because Apple decides not to "flex its corporate muscle" and allows a supplier to take whatever time they need to get their act together?
If Apple played as nice as some people here seem to expect, we'd probably just be seeing the first few people with an actual iPhone 1 in their hands.