GT Advanced Cuts Debt Deal with Apple
Earlier this month, the tech world was taken by surprise when GT Advanced Technologies – the firm that had signed a $578 million deal to provide Apple with sapphire crystal displays for its devices – filed for Chapter 11 bankruptcy. Today, Reuters reports that GT has entered into a new forgiveness deal to repay the $439 million debt it owes Apple on undelivered sapphire products.
According to the report, GT Advanced has been “released from all exclusivity obligations with Apple,” meaning that it can sell to other companies in an effort to pay back its creditors as part of its bankruptcy filing. Interestingly, despite the end of the exclusivity agreement, GT won’t simply start selling sapphire to other companies – rather, it’ll begin selling sapphire crystal making equipment, specifically the furnaces it had bought to provide Apple with sapphire products.
At this point, it’s still not clear what happened to cause GT to file for bankruptcy protection. However, the nature of this latest development would seem to indicate that the company may have overestimated its ability to produce sapphire crystal on a large scale while keeping costs in check. If making sapphire were still a viable moneymaking option, that’s what it’d be doing, right?
The report says that GT’s representatives “said the expected deal with Apple would save money and allow it to be more open about its mysterious Chapter 11 filing.” Hopefully we’ll find out soon. In the meantime, Apple will clearly be finding a new supplier for the sapphire displays that will be used in the Apple Watch device when it launches next year, in addition to the sapphire crystal it uses in its Touch ID sensors on its iPhones and iPads.
Is sapphire crystal just an impractical component in consumer gadgets? Or is mismanagement to blame for GT’s financial woes?