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

[arkmannj]

All I hear from his mouth and the CEO's mouth is that the executive management team of GTAT doesn't know how to do their jobs.
they can't deliver enough promised product to a client
they can't discern if a contract is in their companies best interests
they can't negotiate a contract that is in their companie's best interests
they can however blame everyone else

 

[unplugme71]

I did contracts at one point and even though the entire contract isn't published, I would not have signed something that gives my buyer right to change dates and cancel orders without penalty. I would also allow it to protect the interest of my company as well. No sale, no matter how big, is worth everything Apple is asking for.

I do not blame Apple. The COO and legal team of GT should be fired for signing something like this. Clearly the legal team does not have adequate experience in contract management and the COO should have read some of it over.

 

[KPandian1]

Contracts!

This sort of Apple business model is just plain disgusting...

Read your own work contract, if you are an employee; or read the contract your lawyers drew up for you as an employer, if you run a business. It is always one-sided!

GTAT was in this either to succeed by sweat - or if it is too hard, fail and profit by insider trading!

They got there!!! The fail-safe was Corning's glass!

Good lesson on how to fail in business and become a billionaire!

 

[hleewell]

I would suggest you have a look at what Apple has invested into this partnership and how much they have done to build up GT Advanced's capacities and capabilities. This kind of deep involvement and investment into a supplier is extremely unusual. The usual customer-supplier relationship is that the customer orders something, and the supplier delivers it and gets paid. But in this case, Apple made a major upfront investment. And people are still expecting Apple to be softer on GT Advanced? What else could they have done? Lobster dinner for GT Advanced employees every day? Free Mac Pros on each desk in the R&D department? Tim Cook working sapphire furnaces in his free time?

Yo may oversimplify a lot of things there but your post is hilarious, LOL!!! Red Lobster, Mac Pro & Tim Cook at the furnaces

 

[Yinmay]

I hope Apple will continue working on non-brittle sapphire displays. Display and battery technologies are the last two "frontiers" of mobile device research.

There is a clear commercial and competitive advantage to it. It's no wonder the centuries old watchmaking industry doesn't use gorilla glass, despite having adopted other new technologies before (titanium, ceramic, liquid metal, quartz, etc.).

Obviously the technology isn't mature enough yet. And when the limitation is technological, it doesn't matter what the contract says, if you can't comply, you won't comply.

As I understand it, the Chapter 11 filing was just an attempt to avoid Apple's contractual damages. Apple hoped that stringent contract terms would help make it happen, as they do with any other supplier. In that regard it's as much Apple's failure as it is GT's.

I honestly hope it works out in the end. Instead of fighting and losing precious time, maybe they can make it in time for the 6S? S as in Sapphire of course

 

[kcmac]

So Apple foots the bill but can't call the shots. Hmmm.

 

[2IS]

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 ?

He took a gamble, simple as that. If it worked, it would have been huge for GTAT, and obviously for us consumers. I know this is businesses, but I think if Apple was a bit more flexible with it's contract terms, even after they were agreed upon, that it would have benefited all parties involved. GTAT, Apple, and Apple consumers. Instead, Apple's greed put a company into bankruptcy, cost themselves money, and caused a much longer delay in getting sapphire equipped phones into the market than it would have if they worked better with GTAT.

 

[Trapezoid]

Why did they sign the contract then?

Edit: I see this has been asked multiple times

 

[feldhaus]

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.

If they didnt feel comfortable with the terms they shouldnt have signed the contract. What I am irritated at most is the fact that they took it on knowing they were too constrained, they should have said these are the things we need to make this work as intended. But they sign the contract knowing they cannot fulfill the needs, let their stock get up and then sell it all off making millions themselves before filling, blah, worthless people.

 

[jackzig]

Cry Babies

Let's see now, GT signed a deal that heavily favored Apple. Didn't GT read the contract before they signed? Really just how much sympathy can you have for these people? Apple isn't a charity, it's a business and it's stockholders expect it to get the best deal from it's suppliers it possibly can. Whoever signed off on the contract at GT should be canned.

GT should stop crying, like NJ Gov. Chris Christi says "sit down and shut up"!

 

[dysamoria]

So, is this the justification for why CEOs and such get such ridiculously high salaries? You know the people that agreed to these insane requirements won't lose much. They'll make their millions and then make a lateral move to another ridiculously high paying executive position. Maybe less pay and industry power than they have currently, but they'll do fine.

While there are many cases of failed independent small businesses, where the founders lost big time, I don't see too many poverty-suffering former CEOs of publicly traded corporations... These people will do fine and there will be little accountability. Their employees, on the other hand... I don't think high pay should go to those with the least to lose... But they set the rules, not the people with the most to lose when the high paid execs screw up.

 

[pmbooks]

tiny fiddle time

If Apple broke the contract, sue em.

Otherwise, Gt is serving everyone some sour grapes—time for the world's tiniest violin.

 

[luv2seaters]

To complin about the contract after the fact is so short sighted.If you had a problem with Apples demands you should not have signed it.Apple invested heavily into them.Apple was just expecting something back.Seems to me they could not produce and now try to blame Apple.

 

[Keirasplace]

I think some of you are being harsh on GT. Yes, they signed a contact and they are undoubtedly responsible for their actions. However, if this had worked, they would have had one of the worlds biggest companies as their primary customer and would have made a ton of money.

In business, sometimes you have to take huge enormous gambles. Sometimes these gambles pay off handsomely, other times they go drastically wrong. At the end of the day Apple can abuse their position and almost dictate the terms of an entire contract. This really needs to be investigated because it's completely unacceptable for a business to fail like this and Apple to not be held in some way accountable for the unreasonable demands they were putting on GT. But I am a realist and ultimately Apple will get away with this and no one will care about GT or their staff who are now out of work.

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Probably the most sensible comment posted in this thread.

WTH unaccountable, they lost 400M dollars, you think no one at Apple is suffering from this? You think that because its not much money to Apple, we should just let it slide that GTAT basically screwed Apple of almost 500M dollars and if they had missed their Iphone 6 deadline, possibly tens of billions of dollars in profits.

Good grief! Seriously, do you even read yourself?

What about the god damn GTAT executive's responsability to their shareholders and employees? That'S their whole job, making sure good thing happens... GTAT wasn't a penny stock or some kind of high risk OTC stock? The CEO alone is responsible for this debacle and him alone, not Apple.

 

[benboros]

Or....Dont take on a job you cant deliver on.

 

[Steve121178]

WTH unaccountable, they lost 400M dollars, you think no one at Apple is suffering from this? You think that because its not much money to Apple, we should just let it slide that GTAT basically screwed Apple of almost 500M dollars and if they had missed their Iphone 6 deadline, possibly tens of billions of dollars in profits.



Good grief! Seriously, do you even read yourself?



What about the god damn GTAT executive's responsability to their shareholders and employees? That'S their whole job, making sure good thing happens... GTAT wasn't a penny stock or some kind of high risk OTC stock? The CEO alone is responsible for this debacle and him alone, not Apple.

I think you'll find I said they are already accountable, but Apple DID have a part to play in their collapse.

And calm down, you'll have a stroke if you carry on raging at people like that.

 

[grahamperrin]

'Apple's Strict Sapphire Contract Terms', abbreviated

Contract.

 

[whtrbt7]

So it looks like the 262kg boules are the limiting factor in GTAT's deal with Apple. The risk was taken by both companies in this case with Apple putting down investment into the facility (albeit, possibly less investment than actually needed due to the need for backup power), while GTAT put in their expertise and technical knowledge. The biggest problem seems to be the timeframe for "cooking" the sapphire crystal which would take an exponential amount of time due to the size of the large boules. I would have thought GTAT would have known how much time it would take to grow these larger boules but the oversight on backup power and the cutting tech made it even worse which could have made the processing of even finished boules impossible. The technology is close but seems to have some new problems due to the larger boule sizes. If Apple fronts a little more seed money to develop the sapphire crystal tech, it might yield results in a year or two.

 

[Robstevo]

Seems to me at the time they simply saw the dollar signs and signed the contract no matter how bad it would be if they didnt meet there requirements.

If they thought for even a second that they might not, then they should have not signed the contract , and they should be punished for not providing the best option for the shareholders. Now these guys have probably sold there stock and wallked away with millions, meanwhile the average guy who pumped in there hard earned money are screwed.

Stinks of corruption, like most cases like this on the stock market.

 

[DonutHands]

They accepted the contract because Apple gave them five hundred million dollars, which they were supposed to use to build capacity to manufacture Sapphire crystal, which they would have sold to Apple for lots of money. You know, the Sapphire crystal screens that were supposed to go into the iPhone 6.

? your comment makes no sense in relation to mine ?