I'm fuzzy on this area of law, but if GT owes a bunch of money to Apple and they can't pay, isn't there a way for Apple to just take over GT?
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GT Seeks to Void 'Oppressive and Burdensome' Agreements With Apple, Outlines Sapphire Wind Down Process
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If the contract was vague enough to let Apple unilaterally determine what quality level was acceptable, then GTAT has only themselves to blame.
If Apple refused to accept product that met the contracted quality level, I would expect GTAT to sue Apple for breach of contract.
Chapter 11 Bankruptcy is designed to allow a company to reorganize and relieve it's debts so as to continue operation. Shedding staff and assets is a common practice in corporate C11 reorganizations.
As such, this filing could be a play by GTAT to "forcibly renegotiate" the contract with Apple to terms that GTAT finds less "onerous and burdensome".
Considering Bankruptcy is as much a legal proceeding as it is a financial one, it would not be to Apple's legal or financial benefit to "debate this through the media" at this time.
Keeping quiet is the prudent course of action for Apple to take at this time. It is the same reason GTAT is not actively discussing the case, themselves.
Apple will be one of the creditors due to the investment they made, but the decision on who gets what assets will be determined by the Bankruptcy Judge overseeing the case.
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Agreed...all this is theater is to win sympathy from the court.
The real issue is that this technology is not viable at this time (or may never be) - otherwise Apple would have gone ahead and continue to make payments or ultimately just buy them outright.
Apple is already paying for exclusivity of Liquid Metal and outside of the eject tool nothing else has come out - so it is not above them to support a technology if they see a potential.
I am with you on that, what will their argument be: "We signed contracts, took almost $500 million, failed to live up to contracts, now we want out with as much money as we can get away with?" Of course, it's all speculation as we don't know much of the truth of the story and quite possibly never will. Maybe just part of the strategy in that "the best defense is a strong offense".
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Dude, kudos to you! I was prodding my monitor thinking a bug had got between the LCD and the glass (once happened with my old Powerbook!), and I was about to shoot some video of it to post on Vine or something.
Very clever! I feel a right idiot. Ha ha!
Like so many people today - "Make the agreement to do xxx / don't do xxx / take no responsibility for your actions regarding xxx / declare bankruptcy and skate away!
No sense of taking the consequences for your actions.
So wait, apple gave you a buttload of money to build a facility to produce sapphire for them, and because you couldn't meet those contractural obligations, after taking all that money you're now claiming the contracts are a burden?
Maybe you're just a poorly ran company that shouldn't have committed on said contracts knowing you couldn't provide the yields the contract expected.
You dropped the ball, Apple gave you every opportunity to be a better company, you just didn't want it bad enough, and the proof that your company is a poorly ran one is signified by your ceo selling all his stock knowing you couldn't meet the contracts you signed.
I don't blame apple for not being required to use the sapphire if gt couldn't meet their demands, Apple is a better company to not allow them to be put in a position to be screwed based on another company's poor corporate culture and business sense.
Gt is looking more and more like a pouty kid.
Maybe you're just a poorly ran company that shouldn't have committed on said contracts knowing you couldn't provide the yields the contract expected.
You dropped the ball, Apple gave you every opportunity to be a better company, you just didn't want it bad enough, and the proof that your company is a poorly ran one is signified by your ceo selling all his stock knowing you couldn't meet the contracts you signed.
I don't blame apple for not being required to use the sapphire if gt couldn't meet their demands, Apple is a better company to not allow them to be put in a position to be screwed based on another company's poor corporate culture and business sense.
Gt is looking more and more like a pouty kid.
a big assumption
The big assumption that nearly everyone is making here is that GTAT couldn't keep up with the production. As MR reported a few weeks before launch, the sapphire deadline was missed by weeks due to something UP the chain from GTAT:
https://www.macrumors.com/2014/09/11/sapphire-display-iphone-6-missed/
"According to Margolis' sources, the issue was not GT's production, as the company is said to have been steadily shipping out sapphire from its factory in Mesa, Arizona. The issue appears to have occurred in the next step in the supply chain, where finishers in China struggled with yield issues turning the sapphire into display covers."
GTAT was able to provide high quality sapphire, but the Chinese assembly was not able to finish it, so they returned all of the sapphire back to GTAT. In turn, GTAT didn't get paid for this.
When you sign an agreement stating that your sole customer is Apple, produce tons of sapphire for it and held up your end of the bargain, only to find out that Apple changes the manufacturing stream and sends back all of your material, you don't have many options here aside from getting out of the original contract, no?
You're just stuck with a ton of material you can only sell to one person. Unfortunately for GTAT they ceased all other types of work and focused solely on this contract. GTAT has been around for many years (formerly GT Solar, producing sapphire for solar panels and LEDs).
I can understand this. When you're in business and someone as big as Apple wants your product, you have two options:
1.) Keep doing what you're doing
2.) You take a risk and try and work with Apple. The reward is worth the risk. It also may have clouded their judgement.
Unfortunately for GTAT they didn't have a Plan B similar to the Plan B that Apple had with iPhone 6 displays being made from glass.
The big assumption that nearly everyone is making here is that GTAT couldn't keep up with the production. As MR reported a few weeks before launch, the sapphire deadline was missed by weeks due to something UP the chain from GTAT:
https://www.macrumors.com/2014/09/11/sapphire-display-iphone-6-missed/
"According to Margolis' sources, the issue was not GT's production, as the company is said to have been steadily shipping out sapphire from its factory in Mesa, Arizona. The issue appears to have occurred in the next step in the supply chain, where finishers in China struggled with yield issues turning the sapphire into display covers."
GTAT was able to provide high quality sapphire, but the Chinese assembly was not able to finish it, so they returned all of the sapphire back to GTAT. In turn, GTAT didn't get paid for this.
When you sign an agreement stating that your sole customer is Apple, produce tons of sapphire for it and held up your end of the bargain, only to find out that Apple changes the manufacturing stream and sends back all of your material, you don't have many options here aside from getting out of the original contract, no?
You're just stuck with a ton of material you can only sell to one person. Unfortunately for GTAT they ceased all other types of work and focused solely on this contract. GTAT has been around for many years (formerly GT Solar, producing sapphire for solar panels and LEDs).
I can understand this. When you're in business and someone as big as Apple wants your product, you have two options:
1.) Keep doing what you're doing
2.) You take a risk and try and work with Apple. The reward is worth the risk. It also may have clouded their judgement.
Unfortunately for GTAT they didn't have a Plan B similar to the Plan B that Apple had with iPhone 6 displays being made from glass.
It seems hard to imagine what could have happened that would give GTAT any legitimate cause of action to sue Apple following Chapter 11. Obviously we can't know for sure, but it wouldn't surprise me if GTAT is threatening to do that as a way to tell Apple that they'll try to get the terms of the contract into the public domain via court proceedings unless Apple lets them off the hook with a favorable settlement in bankruptcy.
Get a grip and get a clue. You think contracts are some moral obligation or something? It's a business tool. If it's more profitable to break a contract, that's EXACTLY what the company should do.
From the viewpoint of GTA, you are absolutely right, and I don't disagree with you. However, I don't think businesses should be allowed to get away with this type of behavior. They should have done a better job of negotiating to begin with. More then likely, they planned to do this from the beginning.
To put it another way, don't be such a *****! Sorry to be blunt, but that's exactly what occurs when people have that viewpoint. They need to uphold the contract they signed because they are able to. See how simple that is?
And yet what does Apple gain from this? They need more sapphire production for the new iPads coming as well as the higher-end Apple Watches. I could also see sapphire replacing glass on Apple laptop touchpads to increase durability.
Forcing GTAT into bankruptcy on the cusp of launching the new iPads and Apple Watches and new MacBooks is not exactly a scenario that is going to win them confidence with a financial community that already spends every waking moment predicting financial catastrophe for the company.
And it is not like Apple has a core competency in sapphire manufacturing - it's why the partnered with GTAT in the first place. So even if they are able to get the plant and the furnaces for free, they don't know how to run them period, much less effectively and efficiently.
Both Apple and GTAT are to blame for this but mostly Apple. Apple loves to offload technical and financial risk onto other parties and did that to the fullest here. GTAT got onboard, betting on the upside of having Apple as a partner and a stable future revenue stream. If GTAT's products meet spec and third parties encounter difficulties, that's not on GTAT - it's Apple's responsibility. Then, Apple, with the deepest pockets, pulls the rug from under GTAT and acts surprised when the business with the shallowest pockets and wholly dependent on this arrangement (which Apple deliberately created) is screwed.
Moral of the story - don't do business with Apple, as they set their contracts so that their screw ups can take you down. Not exactly great for their reputation.
Moral of the story - don't do business with Apple, as they set their contracts so that their screw ups can take you down. Not exactly great for their reputation.
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I'm sure this will be investigated by the SEC. We'll see if he reported his sell-off. It's pretty much public knowledge now.
http://www.sec.gov/answers/insider.htm
Apple gave them $500 million. That's a lot of money to give to a company for the sole purpose of breaking them.
More than likely we are dealing with some level of mismanagement and over promising/under delivering on GTA's part, but when you are the hook for hundreds of million owed to Apple such a mistake is fatal.
This sounds more like sour grapes than a bankruptcy. Everything was fine and dandy as long as Apple was sending the checks but as soon as it becomes time to produce results:
Isn't that convenient?
Has a judge ever determined that a company doesn't qualify for bankruptcy protection? It sounds like Apple is willing to be flexible about the money. Could the judge say, "You guys didn't do your due diligence with Apple and they're willing to front you the money to keep going under the agreements, so... get back to work. No bankruptcy for you!"
Isn't that convenient?
Has a judge ever determined that a company doesn't qualify for bankruptcy protection? It sounds like Apple is willing to be flexible about the money. Could the judge say, "You guys didn't do your due diligence with Apple and they're willing to front you the money to keep going under the agreements, so... get back to work. No bankruptcy for you!"
If true, that definitely changes things somewhat. Still, what terms did they allow in the contract with Apple? Did they allow Apple to reject quality sapphire at its sole discretion and without cause?
That would have to be the stupidest thing to agree to unless GTAT had a backup plan for selling the sapphire...
Ehh, stick to Apple news
Yes, GT has a relationship with Apple, but at the end of the day this is all just so disinteresting to me, personally.
The more I see stories about GT Advanced I just yawn. Am I the only one? Love you though MacRumors, I can never be mad at you.
Yes, GT has a relationship with Apple, but at the end of the day this is all just so disinteresting to me, personally.
The more I see stories about GT Advanced I just yawn. Am I the only one? Love you though MacRumors, I can never be mad at you.
I'm thinking they wouldn't have been able to fulfill the obligations for the iPhone 6.