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This is all looking a lot more straightforward now.

GT Advanced executives made a gamble with known risks and payoffs. They took a half-billion dollar loan (which is a heck of a lot of money) that had harsh requirements attached to it, with the potential payoff--if their technology managed to live up to the expectations in the timeframe promised--of selling fabulous amounts of sapphire to Apple. Big risk--if they can't meet the promises, they have no backup buyer and Apple can pull the rug out from under them--but huge payoff if they succeeded.

So the execs knew exactly what they were getting in to, and went for it. You can argue whether this was a good idea or not, but they decided the risk was worth it. Who knows, if I was confident enough in my technology I might have, too.

Then halfway through, things started to go south, and they were having trouble meeting their promises. The executives at that point clearly decided it was time to cash in and all started filing to sell stock--rather obviously hoping that the sales would go through before the price crashed. Which many did, and they got a hefty payoff.

Then, after dragging it out a while longer (and getting a personal payoff, at least partly), they decide that they don't like where their gamble has taken them, so they try to bail on it by declaring Chapter 11 so they can kill the whole deal without having to follow through on it. From a shrewd business standpoint, it makes sense--you take a gamble, and when you're clearly losing, you figure out a way to flip the table and walk away from the game. In this case, with a fair amount of money in your own pocket.

Apple is a harsh partner in all this, sure--I probably would be too if I was putting up a half-billion dollar loan on unproven technology. It does not, however, make the GTA executives look very good--they took a deal knowing full well what it entailed, then when their technology failed to deliver they personally cashed in and completely dumped both the partnership and the workers they'd set up in an effort to try and keep the remainder of the business on their own terms.

The only questions are whether they actually knew that their technology was never going to cut it a year ago and just drug it out to keep the stock value up until some sales went through, or whether their decision that they definitely couldn't hack it and had no choice but to bail came much later.
 
No sane business management team would ever agree to a deal with Apple given those terms, right? Hell, I have no business education and even I would never agree to that deal.

Why do you say that? Article even states Apple tried to help supplier with meeting requirements. Considering GT's previous revenue was approx. 1/15 of what was expected with Apple contract. I think the issue lies with GT not being able to scale and also taking Apple's money when their was high probability they would not meet the contract. Early selling of stocks indicates that. This looks more like US manufacturing screwing up when Apple tries to bring jobs back in the US.
 
You'd never agree to a multi-part loan where you have to meet certain (specified) milestones to receive later payments? :confused:
Yeah, seriously. If you said to me "Here's a massive amount of money to expand your business, with the caveat that you're now tied to us and your technology had better do what you claim it does when you claim it will... but if you pull it off we will be buying nearly unimaginable amounts of material from you." I would seriously consider the deal, and might well take it.

If I was really, really confident in my own technology, I'd be even more likely to go for it--why wouldn't you, if you're confident you can deliver and get that payoff? Half-billion-dollar loans don't grow on trees, after all.

There are reasons the risk averse might prefer to stay small and build organically, and that's perfectly legit. And if you're not confident your technology can do what you say it can, then you'd have to be either a fool or a greedy CEO planning to sell a lot of stock to do it.
 
I think this would be a great opportunity for Apple to simply buy out the company and take on manufacturing of the sapphire for themselves. As a side business, they could start also selling it to other handset manufacturers and make even more money.

Take on? Why get into a business they have no knowledge of. Why buy the company when even the current company staff are not able to produce the quality they want.

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Apple took NO RISK! How could someone say that? How stupid!

Apple will at least get all the equipment back.

For those Apple fanbois, I find it hard to believe that anyone believes Apple didn't know what was going on in Arizona after investing this much money.

If so, then Tim Cook is certainly NO STEVE JOBS!

YOU ARE SO SILLY. Of course Apple took a risk in the amount of $500 million.

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Did the above companies got loan from Apple? Do they have financial obligations to Apple? Do they only able to sell products to Apple?

I thought Sharp did get $ from Apple. Why wouldn't they expect obligation to Apple. Are you stating if Apple lends you $ that you expect to sell to Samsung even though Apple paid for the equipment and materials to produce products?
 
Another point. If GT Advanced impressed Apple this much to invest so much, somebody will want this technology. I'm just not buying this story that Apple was "surprised."

More like they lost a poker bluff in my opinion.

If you look at the previous quarters numbers, GTAT had lot of money in the bank, then you jump to the last quarter and all of the cash was depleted.

Apple doesn't get day to day reports on everything. They only get information as they request it and GTAT supplies it and they were probably focusing on delivery and hurdles they had to meet as they forked over more cash. I think it's a performance based procurement contract, which is similar to other deals Apple has with just all of their suppliers of non-off-the-shelf components that are custom tailored for Apple. Apple has similar deals for screens, processors, and other components that are actually designed by Apple. Apple doesn't always use off the shelf components and they need to ensure timely shipments that meet or exceed their specs. and they have to have factories built to ensure this and Apple pays for most of these factories to be built as part of the deal.
 
Do you seriously think that's how business works? Do you think a lawyer will draw up a contract from a supplier where the supplier can **** up and completely derail a launch without repercussions? And yes many suppliers also do need to meet specifications before orders go through and yes - contracts can be signed where a supplier will have to buy back or pay for warranties if there are defects. These a ****ing financial issues.

Apple is give GT advance a loan with attachment that you need do this that for me to continue loaning you money. You are required to meet the standard set my me and because I made a loan to you, so you can not sell your produce to anyone. BUT I do not have obligation buy from you. Do you honestly think this is fair?

We are not talking about one supplier meeting certain specifications. The most Apple gonna losss from this is the money. Just like all other loan, creditor will have risk of losing entire capital. That is the risk Apple need face when loanig money to someone.

Seriously, the management of GT Advance is stupid and Apple is greddy. It just too much strings attached to the agreement making whole agreement unfair to GT Advance .
 
Apple is give GT advance a loan with attachment that you need do this that for me to continue loaning you money. You are required to meet the standard set my me and because I made a loan to you, so you can not sell your produce to anyone. BUT I do not have obligation buy from you. Do you honestly think this is fair?

We are not talking about one supplier meeting certain specifications. The most Apple gonna losss from this is the money. Just like all other loan, creditor will have risk of losing entire capital. That is the risk Apple need face when loanig money to someone.

Seriously, the management of GT Advance is stupid and Apple is greddy. It just too much strings attached to the agreement making whole agreement unfair to GT Advance .

How was this unfair to GT?

They had no issue in taking the loan.

They were not forced into this agreement; they could have simply told Apple "no thanks" and forced Apple to look elsewhere for a sapphire supplier.

Maybe GT doesn't like the terms of the loan now, and people such as yourself are stating that is "unfair" to GT to have entered into this arrangement, but I'm fairly certain they (GT) had legal counsel at the time of this arrangement.
 
Yeah, seriously. If you said to me "Here's a massive amount of money to expand your business, with the caveat that you're now tied to us and your technology had better do what you claim it does when you claim it will... but if you pull it off we will be buying nearly unimaginable amounts of material from you." I would seriously consider the deal, and might well take it...

I'm also saying to you I can choose not to buy your product if I don't want to do so. Oh yeah, even if I don't buy it, you can't sell it to anyone else either. If you work with me, I will be your only customer (when I choose to be, because remember, I'm not obligate to buy anything from you). Did I mention you can't sell to anyone else?;) You are only viable as long as I buy your product.

Couple what you said + what I said, then you get the full deal. Would you seriously consider it still? Not judging, just askin'.
 
Their Equipment is Junk

I think that for their $440M, Apple should get the equipment in Arizona (they already own the facility which they are leasing to GTAT) and they should get the GTAT patents. As far as I can see, the GTAT execs already took their payday. Let's save the jobs in Arizona if possible -- Apple is the only one who can do that.

I've heard that the problem is that the GTAT equipment is not up to snuff. There is a suit going on in Taiwan from another Sapphire supplier that bought their equipment that does not work either along with a number of China firms.

If anything Apple screwed up in believing their equipment works.

http://www.wantchinatimes.com/news-subclass-cnt.aspx?cid=1206&MainCatID=12&id=20141014000114
 
I wrote here on august 2 that iPhone 6 wouldn't get a saphire display, and believed it long before, and I'm no insider:
https://forums.macrumors.com/showthread.php?p=19433510#post19433510
It's been the same with liquid metal hype. It's been the same with expectation of a bigger screen on 5S.

Just need to observe AAPL commercial policy and advertisement: promising a lot, delivering little, over-emphasizing the little they provide.

There's a bigger screen on 6 though, as expected.
 
No sane business management team would ever agree to a deal with Apple given those terms, right? Hell, I have no business education and even I would never agree to that deal.

What are you talking about? Which company is out $300+ million from this deal gone bad?! Apple! "All the risks fell on GT?! That's obviously BS ... Apple is the company that got swindled.
 
Management gets millions... workers get unemployed. Because it's the management that take risks. :rolleyes:

And worthless politicians use the anger to raise taxes on the upper middle class. The story of today's America in a nutshell.
 
No sane business management team would ever agree to a deal with Apple given those terms, right? Hell, I have no business education and even I would never agree to that deal.
Why not. Apple gets you the facility and they purchase for you the equipment. All what you have to do is to manage your time to get the product out on the specified time. IF you know that you can not meet the time THEN you should be honest about it and work with APPLE to change the milestones,so maybe use it for iphone camera and watch till you ramp up the production and then use it for the face of iphone 6s next year.
 
No sane business management team would ever agree to a deal with Apple given those terms, right? Hell, I have no business education and even I would never agree to that deal.

So it's pretty safe to bet that those weren't the terms.

Lets sanity check the article.

"GT Advanced's deal with Apple was highly favorable to the Cupertino-based company, with the sapphire supplier taking on all of the risk."

But we know that Apple risked at least $103m x 3 = $309,000,000

How is that no risk. What did GTAT actually risk? They would have gone out of business several months earlier without the Apple deal.
 
Let's not forget that a role was played by websites like this one, with speculation and rumors driving investors over the cliff of sapphire iPhone predictions.

There's a reason why Omega Seamaster (diving) watches use sapphire crystals, and the Omega Speedmasters (moon watch) use Hesalite (acrylic). Sapphire has good compression strength, but has limitations in terms of breakage resistance in tension, even in the relatively thick sections used in watch crystals.

We will likely never see an affordable pure sapphire phone face in the size of a 6 series. Some sort of sapphire-glass lamination is possible, but you won't see affordable monolithic sapphire screens in these sizes in this decade.

All 3 of my Speedmasters use sapphire.
 
There are a few other handsets already on the market that use sapphire screens. Apple would not have been the only one. They would have been the only mainstream handset with it, but let's not act like Apple would have broken new ground with sapphire screen tech.

It doesn't matter. It's a selling point that other mainstream phones would take a while to copy. Like you said, no one knows about the other phones that have it.
 
Since there's a non-disclosure agreement in effect, none of you really know anything, but you all think you do. At least I'm the only one saying I don't know what happened, but I find it VERY HARD to believe Apple was duped by this firm unless Tim Cook is a complete buffoon.

Back to popping popcorn. The court is going to throw all these NDs out the window very soon.

Then we'll know.
 
Since there's a non-disclosure agreement in effect, none of you really know anything, but you all think you do. At least I'm the only one saying I don't know what happened, but I find it VERY HARD to believe Apple was duped by this firm unless Tim Cook is a complete buffoon.

Back to popping popcorn. The court is going to throw all these NDs out the window very soon.

Then we'll know.

I love it. You claim that we know nothing, just like you and then go on to claim that think you know what Apple did know. Can't just let it go, can you?
 
Somebody probably stated this already, but Apple will probably buy them out! Would they even let Apple buy them out?
 
I really don't give a **** about all this behind the scenes stuff, except that whatever happened, it looks like I'm not going to have a sapphire screened phone, for a very very long time, and that makes me sad. I was so excited for Sapphire Liquimetal 2gigRAM iPhone6. Instead I just have the same old 5s and have no reason to upgrade.

Sucks.
 
I'm also saying to you I can choose not to buy your product if I don't want to do so. Oh yeah, even if I don't buy it, you can't sell it to anyone else either. If you work with me, I will be your only customer (when I choose to be, because remember, I'm not obligate to buy anything from you). Did I mention you can't sell to anyone else?;) You are only viable as long as I buy your product.

Couple what you said + what I said, then you get the full deal. Would you seriously consider it still? Not judging, just askin'.

I think the misunderstanding is calling the sapphire screens GTAT's product. GTAT provides equipment and expertise, but they are not a manufacturing company. They took $500 from Apple and tried to make sapphire screens to Apple's specifications and failed. If successful the payoff would have been huge for GTAT and IMO a risk worth taking.

Ultimately this is GTAT's fault for not meeting Apple's strict standards, which I'm sure were laid out in the contract. GTAT agreed to the supposedly 'onerous' and 'oppressive' contract and now they are acting like victims, which doesn't add up.

The executives then used non-public knowledge of the failing deal and sold large quantities of shares.
 
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