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In very general terms, it's pretty much an obvious outcome: You bet big and don't deliver (or just get unlucky), you're going to get ripped to shreds. The theoretical payoff of being the exclusive screen material supplier for the colossal iPhone 6 rollout was huge, but as with just about any deal like that, you're playing with fire if anything at all goes wrong.

There is a very pertinent fact in terms of GTA's leadership and decisions in 2013 when they signed on with Apple that very few of these news stories seem to be making note of, though: The company was in terrible shape. If you look at their financials over the preceding few years, their gross and net sales had completely cratered in large part due to the collapse of the PV solar market. Their share price, depending on when you look during the year, was down to somewhere between half and 1/5 of its peak (high $16.50 in July 2011, low well under $3 throughout March 2013).

So prior to, and exclusive of, signing on with Apple, they were not doing well. At all. They might have recovered if they'd stayed away from Apple, but just looking at their gross and profit figures, they might have been out of business within a couple of years anyway, so this could have been a desperate last-ditch attempt to salvage things, for all we can tell.

If someone knows more about the precise financial state of the company, and the likelihood of market recovery being fast enough to stave off disaster, in late 2013, I could be off base about that last bit, but it's simple numbers that they were not flying high at the time of the deal.
 
when & where...

With all of that being said in the article: where & when are these sapphire screens coming???
 
Welcome To The Business World

Companies sign contracts with clauses that they cannot possible meet - just to get the business and hope that they can dodge those clauses.

The lesson here is simple: Don't figure to be able to dodge a bullet when contracting with The World's Most Valuable Company - they will eat your lunch when you attempt to make that dodge!
 
Seriously MacRumors? "There was a risk". "A classic Apple bait and switch". Wow.

They were blinded with greed and WILLFULLY signed a contract with Apple! They could've back out at any time. Did they? Nooooo! There was no risk. There was no "bait and switch".

Um...the article mentioned "alleged." People get so worked up about this story it's funny...
 
You'd have to be pretty credulous to believe GTAT's version of events.

It's pretty easy to tell where the B.S. is coming from... just follow the money.

Who actually profited from this deal?

Not Apple, who didn't get the Sapphire screens they wanted. And how much of that $439 million loan will they ultimately get back?

Not the City of Mesa, who got no jobs out of it.

Certainly not the general employees and sharholders of GTAT.

However, a very small subset of employees and shareholders of GTAT did benefit, and quite a bit. To the tune of million of dollars. Who? Why, the CEO and CFO of GTAT, that's who! They seem to have profited quite a lot on the sale of stocks who's price was buoyed by the prospects of this deal. You know, the decision makers at GTAT. They made out like bandits. Hm... exactly like bandits, in fact.

It doesn't take a genius to understand what happened here.

Here's another way to look at it: are there a lot of other corpses of Apple suppliers lying at the steps of bankruptcy courts?

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With all of that being said in the article: where & when are these sapphire screens coming???

You're kidding, right?

They aren't coming. Not any time soon. The best hope for this is that someone buys up some of these furnaces -- they should be relatively cheap now that the market is flooded with them -- and figures out how to do what GTAT couldn't: Make screen-quality sapphire at scale for a reasonable price. Since this presumably won't be Apple it can be a niche phone so the scale won't need to be nearly as big, the price can be higher and probably the quality doesn't have to be great. And the cheap price of the furnaces should help.
 
Seriously MacRumors? "There was a risk". "A classic Apple bait and switch". Wow.

They were blinded with greed and WILLFULLY signed a contract with Apple! They could've back out at any time. Did they? Nooooo! There was no risk. There was no "bait and switch".

If there was no risk why are they going out of business..?
 
I love the armchair business analysts who know all the details of the situation and can correctly point out who was at fault, why they were at fault and so on.


Well played MR in creating another thread bound to get lots of hits.
 
I love the armchair business analysts who know all the details of the situation and can correctly point out who was at fault, why they were at fault and so on.


Well played MR in creating another thread bound to get lots of hits.

Apple is always in the right, didn't you know?
 
Greed is a Fantastic Motivator

GT saw the Dollars. They Hit the "JACKPOT" The Deal of a Lifetime. The Ship that was going to Save them. The problem is that when Greed sets in parts of the Brain switch off and it is difficult to critically access all the Parameters. That is why you generally need Legal Council when Contract get Complex and especially when the other side is using one, and you can be sure that Apple was.
So they either had bad advisers or they were in over there head before they even got started and Greed made them ignore critical voices. Seeing that the CEO cashed out at a time it was completely clear that it wasn't going to go through. Is enough prove. You don't need to see a Fart to smell it.
 
It's a pretty impossible task but one they chose to take on so they only have themselves to blame. Do you really think you can go from zero to supplying one of the largest electronics companies in the world? :rolleyes:
 
Here's another way to look at it: are there a lot of other corpses of Apple suppliers lying at the steps of bankruptcy courts?

GTAT was more an investment that didn't work out than an actual supplier. The closest thing to Apple screwing over a supplier I can think of is Audience, who were blindsided when Apple dumped EarSmart from the iPhone 5 after building it into its A5 CPU for the 4s. They say they didn't know about it until the phone was released. Their stock tanked from $20 to $5 overnight. It eventually recovered to as high as $15, but the Samsung downturn and the slow development of new products has taken them under $4. They've been bleeding and are 2-3 quarters away from running out of cash.
 
On the assumption you work for a corporation. There will be things in your contract that you will ignore, (or most likely haven’t read).
A classic example in technical roles is that you can’t work for someone else in that particular field for 12 months after leaving.

Here’s what I guess happens with a lot of people, some of which will be on this forum, they ignore and when a company tries to enforce they cry foul.

There are a lot of hypocrites here. Lots of people/businesses sign contracts and violate EULAs that they cannot/will not meet.
Copying of music is one of them. You buy the disc and then put your own slant on the legal parts that you signed up for when you bought it.

Let’s not pretend that GT are alone in doing something that we wouldn’t.

Respectfully, contracts that businesses sign -- particularly contracts that affect a business entity's core operation -- are quite different and treated quite differently from contracts between corporations and individuals. As a corporate lawyer, a big part of my job is making sure to advise my client on the worst-case scenario that could follow from a particular contract. On a contract of material significant to the client, that review will be clause-by-clause, and will spell out exactly what the contract allows the counterparty to do. It therefore is almost inconceivable that GT didn't understand what it was agreeing to do, and what power it was handing over to Apple. The situation GT finds itself in right now was because it chose to accept onerous contract terms in the hope of fabulous success if things worked out a certain way. Put differently, it knew or should have known that it was bargaining for a high-risk, high-reward scenario. None of that is Apple's fault.
 
GT is indeed painting a bleak picture of Apple...they have to put the blame on the other guy.

Stated that way the word makes more sense in the context, but it seems the real message here is that Apple is being portrayed by GT as a hard-nosed and uncompromising business partner.

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It reminds me of when Jobs approached Corning before the iPhone's original launch. He wanted to use their Gorilla Glass on the iPhone's screen, but Corning initially didn't think it was capable of producing enough to satisfy demand. Jobs gave them a similar "big boy" line, urging them to rise to the occasion. Corning did, and the rest is history.

GT could have done the same, in theory. Perhaps in practice it was too complicated. But heck, that company had been producing sapphire for years. Either the CEO was completely ignorant of what Apple required, or he was just chasing after quick money. I find it hard to believe that the company didn't understand the challenges going into the deal.

Entrepreneurs take risks. The bigger the risk the bigger the potential reward. They don't all pay off.
 
A contract is a contract. A binding agreement. If you can't fulfill the agreement, then it's your problem. That "big boy pants" quote is super lame--is that all it takes to bully someone into a bad business agreement?
 
I think the moral of the story is don't sign 1-sided contracts with onerous terms without an escape plan. There's no such thing as 100% probability of success.

Absolutely.

Original Article said:
Apple offered a lower price for the sapphire than GTAT expected, and wouldn’t budge - meaning GTAT was selling its sapphire at a loss. It faced a $650,000 fine if it let another company use one of the $200,000 furnaces; a $640,000 fine if it sold a 262kg boule of sapphire (worth $20,000) to a rival; a $320,000 fine for late boule delivery (or $77 per millimetre of sapphire). Apple, though, could cancel a purchase at any time.

Why would any company sign this? Yes, you have a good chance to make a lot of revenue, but not necessarily profit, and if you're not making profit, who cares? Who would sign a deal like this where the price wasn't set? And even the revenue wasn't guaranteed, since Apple could pull out at any time.

I'm not really sure there are any winners in this one. GTAT signed up for an unrealistic deal they could never honour, while Apple played hardball with a supplier and ended up losing that supplier and the option of sapphire-equipped iPhones etc.
 
I used to work for an Apple supplier, and while Apple was always tough and demanding, they were also at all times absolutely fair. They put their fingers in open wounds, but they never demanded the impossible. There was nothing "brutal" about it. In fact, my experience with Apple is one reason why I am an Apple customer now.

GT Advanced simply didn't get their act together. Period.

Exactly.

And let's not forget that Apple has dozens of suppliers who DO reach their goals.

Apple gets processors, RAM, glass, LCD panels, etc... basically EVERYTHING comes from suppliers.

So how is it that all those other suppliers can fulfill their agreements... but GT Advanced can't?

I think they bit off more than they can chew.
 
NEW CHANGES TO APPLE SUPPLIER AGREEMENT...

"You must agree to never file for bankruptcy and if so, all documents must be immediately shredded beforehand or we will crush you like a grape. Now sign here dummy." :D

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Exactly.

And let's not forget that Apple has dozens of suppliers who DO reach their goals.

Apple gets processors, RAM, glass, LCD panels, etc... basically EVERYTHING comes from suppliers.

So how is it that all those other suppliers can fulfill their agreements... but GT Advanced can't?

I think they bit off more than they can chew.

Comparing the GT agreement with other suppliers is not a fair comparison. Those companies had long track records as suppliers for other companies.

The thing about GT is that they had no track record, but obviously had a technological advance Apple was willing to invest in.

However in this bad investment, Apple and GT cost people almost 800 jobs.

Ironically Apple's official statement says they are continuing to work with GT and continuing to find jobs for those people. Hmm.
 
GT, not Apple, is at fault

"GT is an excellent example of what happens when a supplier goes all in with Apple and fails to scale its production technology fast enough."

Very inaccurate statement, which show bias for GT. It should read:

"GT is an excellent example of what happens when a supplier goes all in with Apple and makes promises they can't keep (one may call it 'lying' or 'deception').

Also note that GT was going bankrupt BEFORE they entered into the contract and was hoping beyond reason that the contract would save them.

The world of business is not like the 3rd grade where you stick out your lower lip and wink your eyes and hope the teacher lets you try over and over again.
 
It reminds me of when Jobs approached Corning before the iPhone's original launch. He wanted to use their Gorilla Glass on the iPhone's screen, but Corning initially didn't think it was capable of producing enough to satisfy demand. Jobs gave them a similar "big boy" line, urging them to rise to the occasion. Corning did, and the rest is history.

GT could have done the same, in theory. Perhaps in practice it was too complicated. But heck, that company had been producing sapphire for years. Either the CEO was completely ignorant of what Apple required, or he was just chasing after quick money. I find it hard to believe that the company didn't understand the challenges going into the deal.

I agree that it's a similar situation. But remember that sales guy who left GT and put his resume on the internet with a line that said he convinced Apple to choose GT sapphire screens? Do you wonder why he left? What I see there is that someone promised they could do this to Apple, that when it became clear they couldn't meet the promise he was the first to go...and that's almost exactly when the CEO started selling off his stock.

My guess is that the CEO wasn't chasing the quick money, that he was also convinced he could develop a sapphire screen that Apple would be able to use. The only people really duped here WERE Apple, if that sales guy is to be believed.
 
Comparing the GT agreement with other suppliers is not a fair comparison. Those companies had long track records as suppliers for other companies.

The thing about GT is that they had no track record, but obviously had a technological advance Apple was willing to invest in.

The fine folks at GT Advanced knew they had no track record... but they signed the contract anyway?

There aren't many companies doing large-scale sapphire production.

GTA said they could.

But they couldn't.
 
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