GT Advanced: Apple Put Us In An Impossible Situation, Made Us Go Bankrupt

Former Apple partner and now-bankrupt synthetic sapphire manufacturer GT Advanced says that its hardships are nothing less than the fault of Apple, Inc. COO Daniel Squiller said the arrangement between the two companies was "ambitious" and quickly became "unsustainable."

Before filing for Chapter 11 bankruptcy on Oct. 6, GT Advanced made a presentation to Apple management that outlined heavy losses in an effort to get the terms of their arrangement changed. The company was due to run out of cash in a matter of weeks. Despite Apple's being receptive and making proposals on how to solve the problem, "none of Apple’s proposals solved the economic issues in an effective manner," Squiller said.

GT Advanced had a number of elements working against it: There were increased fabrication costs required to produce sapphire of a quality that Apple would accept, and a hefty $1 billion (paid to Apple) fine if GT Advanced should want to sell its assets or sapphire business. Apple's feedback to GT Advanced was that "similar terms are required for other Apple suppliers and thus would be required for GTAT as well," Squiller said.

It also seems that there were numerous logistical difficulties just to get the production facility up and running. Power outages, unanticipated costs and delays, and reconstruction of huge factory floors all worked against GT Advanced in meeting Apple's expectations.

GT "ended up bearing the costs of more than 1,300 workers, utilities, insurance, repairs and raw materials" totaling $900 million, said Squiller.