[NewsPoster]

More details continue to be dug up in the unexpected filing of bankruptcy by Apple sapphire supplier GT Advanced Technologies, with the Wall Street Journal reporting for the first time that the failure of the company in meeting Apple's contract requirements stems directly from a failure to deliver sapphire glass in quantities intended to be used for the iPhone 6 line. The paper does not clarify if the sapphire glass was not up to par, or the company simply couldn't make enough to meet demand.

In other developments, Re/Code is reporting that representatives from GT Advanced have asked the judge in the bankruptcy case for permission to "wind down operations" at the plant, essentially giving up hope of recovery and wanting to liquidate assets and lay off workers. Apple has referred to the bankruptcy filing as "surprising," but was apparently working with the company in an effort to overcome the unspecified issues it was having, having already delayed a request for loan repayment it was due. The company also withheld the last portion of a payment it was due to deliver to GT Advanced at the end of the month.

For its part, GT Advanced has been unusually tight-lipped about the causes of its financial distress, complicating matters. The company told US Bankruptcy Court Judge Henry Boroff that "confidentiality agreements," almost certainly between it and Apple, prevents the company from revealing much in the way of specifics. The company has also asked the judge to close the hearings from the public, and seal documents related to the unnamed third party in the agreements, since revealing the data could cause the company to incur further financial damage.

The US Department of Justice has opposed the motion, saying that "the record is insufficient for the court to find what the court needs to find." The judge is unlikely to allow GT Advanced to close the plant without additional information, but may accommodate the firm's request for confidentiality at this early stage.

Apple's remarks that it is "focused on preserving jobs" at the Mesa, Arizona plant built by the iPhone maker in partnership with GT Advanced has taken on some new meaning in light of the revelation that GT wants to close down the facility. Judge Boroff has set another hearing for October 15 to discuss GT Advance's motion. Apple was allegedly forced to switch to a variant version of Corning's Gorilla Glass as a replacement for the sapphire glass that the company was supposedly planning to use for the iPhone 6 and iPhone 6 Plus.

[Inkling]

This reminds me a bit of how Sears treated a small company owned by a friend of a co-worker. He made fiberglass fishing boats. Sears's contract allowed it to cancel at any time without penalty. They did, and he went bankrupt. Sears then attended the bankruptcy sale, bought up his remaining inventory for a pittance, and sold them at full retail. If this story ends with Apple doing something similar to GT Advanced, then my attitude toward Apple's business practices will resemble the contempt I have for Sears. You don't destroy a company, making its workers unemployed, and then pick over its remains for the profitable pieces.

[jdonahoe]

Didn't Sears also stop selling a novel adjustable wrench made by a US firm and then start selling an obvious Chinese knockoff of his patented tool?

[iphonerulez]

A contract is a contract. If one of the parties can't meet the terms then they lose out. GTAT may have made some impossible claims to get Apple's business but couldn't deliver. That is certainly possible. GTAT's CEO made sure he got his money before declaring bankruptcy so I'd hardly think he was protecting his company employees. I don't think we should be making assumptions because anything is possible. There could have been legitimate reasons why things turned out the way they did. I had such grand ideas about having so much sapphire being available for all sorts of uses and I'm really disappointed it's not taking place. Apple should take GTAT over and continue operations since the equipment is already there.

[chimaera]

Everyone is speculating this sapphire was for the iPhones. However, if it was for the Watch, that could explain why they are not shipping.

[DiabloConQueso]

Apple clearly spells out their demands in the contract, and the company is free to agree or not agree to the contract.

GT Advanced looks like it made a couple of mistakes:

- Agreeing to an output capacity that it couldn't meet
- Agreeing to a quality standard that it couldn't meet
- Investing too large a percentage of the company into a single client
- Poor leadership at the CEO level

GT Advanced didn't get "treated" by Apple in any way other than what they formally agreed to, and if the terms of the contract were uncomfortable, they shouldn't have agreed to them. Their relationship with Apple is/was completely voluntary.

Apple now potentially snatching up the remains of GT Advanced for a song is nobody's fault but GT Advanced's.

Semi-off-topic, but part of the reason that the iWatch is not shipping yet is that it does not have final FCC approval (be this intentional or unintentional on Apple's part -- sometimes companies intentionally delay FCC approval in order to stem the flow of secret information). Sapphire glass may be another reason, but between the glass and FCC approval, only one of those is an absolute, legal show-stopper. You can sell an iWatch with compromised glass because the glass you wanted isn't ready; you cannot sell any kind of iWatch without FCC approval.

[Charles Martin]

Inkling: did you read the article at all? Apple says it is focused on saving the jobs and keeping the production facility open; GTAT is the one that is asking for permission to fire everyone and close the plant. What happened between your friend and Sears really has no bearing whatsoever on this case, and shouldn't be used to pre-form a prejudice against either party. And for the record, Apple actually owns the facility, not GTAT, therefore the practice you ascribe to Sears literally couldn't possibly happen here.

[elroth]

There was a report that a number of high executives at GTAT sold a lot of stock in the company in the last week or two, before it declared bankruptcy and tht stock lost 90% of its value. I hope the SEC looks into that.

[Mike Wuerthele]

Re: Elroth

GT Advanced's CEO under fire for stock trade prior to iPhone 6 reveal | Electronista