Has Apple’s desire for sapphire begun to shatter?
Tom Gutierrez, president and chief executive officer of GT, explained: "GT has a strong and fundamentally sound underlying business. Today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet".
"We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses."
GT has indicated that as of September 29, 2014 the company had approximately $85 million of cash.
The sudden fall from grace of GT Advanced Technologies is a lesson to all suppliers to large multinational enterprises because many industry analysts see GT Advanced’s deal with Apple which involved the need to build a factory in Arizone to make scratch-resistant sapphire glass exclusively for Apple even though there seemed to be no contractual obligation for the multinational to buy the material produced.
Following the bankruptcy announcement Apple’s immediate reaction seemed to be surprise and as yet Apple has not indicated what the company’s next steps will be.
In November 2013 Apple struck a deal with GT Advanced which purported to involve Apple in providing a prepayment of $500 million plus to help install furnaces and other equipment in the Arizona factory, which is owned by Apple and was expected to employ more than 700. The deal would have seen Apple being paid back in installments contingent on GT meeting operational targets.
Apple’s decision earlier this year not to use sapphire glass in the iPhone 6 appears to have dealt a major blow to GT’s financial plans in the short term.
Related articles and links:
News articles:
Apple backs off sapphire display revolution – for now
Apple leads moves to diversify sapphire substrate applications
Sapphire substrate market to triple as smartphone cover demand rockets
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