1. Akshay Masand's Avatar


    GTAT COO Daniel Squiller recently filed revised documents with the court providing more insight into what went wrong between the sapphire manufacturer and Apple. Squiller’s affidavit outlines contractual obligations outlined in GT’s agreement with Apple, which led to huge losses of money as the contract was highly favorable to Apple.

    The contract in particular revealed that Apple had a large amount of control over GTAT’s sapphire production. Examples of this highlighted that GTAT wasn’t able to modify equipment, specifications or the manufacturing process without expressing consent from Apple whereas the Cupertino California company could make any change on a whim. Furthermore, GTAT was expected to fulfill any of Apple’s purchase orders on demand and had severe penalties for failing to do so.

    Continuing on with the trend, Squiller pointed out that Apple was also in charge of the Mesa, Arizona facility that the company had acquired for GTAT and delays at the facility cut into production time. Furthermore, Apple decided that it was too expensive to provide backup power for the furnaces and as a result, power interruptions led to delays and loss of sapphire boules. Another example pointed out that GTAT wasn’t in charge of the sapphire cutting tools it had received and some of the tools didn’t even “meet their performance and reliability specifications.”

    All of this contributed towards GTAT’s inability to meet “cost and production targets” for reasons that Squiller claims were “beyond its control.” He claimed this is what ultimately led to the bankruptcy filing. As of right now, both companies have reached an agreement to dissolve their partnership though Apple claims they want to remain in contact for research work focused on larger sapphire boules. The two companies are set to meet quarterly to discuss GTAT’s progress in the space with collaboration still possible if both sides agree to move forward. Meanwhile, GTAT has started to wind down operations, wrap up production, decommission furnaces and lay off employees.

    We’ll have to wait and see what happens next regarding the matter and if anything else is revealed as more information surfaces.

    Source: Fortune via KCCLLC (PDF)

    Twitter: @AkshayMasand
    2014-10-31 04:10 AM
  2. SpiderManAPV's Avatar
    I won't argue in the least that the contract was in Apple's favor. I really don't know enough about the legal implications of all that. However, I still know enough to know that if you don't like a contact you don't sign it. Once it's signed it becomes your responsibility to do the things listed in said contract.

    If I signed a contract agreeing that I would give $1,000,000 to someone a month for absolutely no reason, that contact would be in my favor, but the fact that I signed it means that I'm legally required to fulfill it. I don't know what's so hard about that too understand.

    ......beware......
    Just your friendly neighborhood Spider-Man!
    2014-10-31 04:33 AM
  3. exNavy's Avatar
    Yet GT agreed and signed this contract. Stop whining already. From what's presented here it seems like both companies are awfully short sighted.
    2014-10-31 06:43 AM
  4. Raptor2213's Avatar
    Just like pretty much everyone else has said on this issue, basic practice of signing any contract is that you do not sign it if you do not agree with the terms, no matter how restrictive they may be. Sounds like GT just got too greedy and just signed a contract without thinking it through.
    2014-10-31 04:33 PM
  5. unison999's Avatar
    $1 million/month: does not even pay enough for 600+ employees they are laying off ($1,666.67/mo average salary using just 600 as a figure), then you have to consider new furnaces + warehouse + all the cost to keep furnaces continuously running to save time and money instead of cold start + all the cost to keep business running... That $1 million a month means absolutely nothing without Apple's orders. If Apple placed their orders as they were suppose to then this is not an issue, but Apple didn't so a company goes under.
    2014-10-31 10:54 PM
  6. StuG III's Avatar
    $1 million/month: does not even pay enough for 600+ employees they are laying off ($1,666.67/mo average salary using just 600 as a figure), then you have to consider new furnaces + warehouse + all the cost to keep furnaces continuously running to save time and money instead of cold start + all the cost to keep business running... That $1 million a month means absolutely nothing without Apple's orders. If Apple placed their orders as they were suppose to then this is not an issue, but Apple didn't so a company goes under.
    There must be more to this story. Either Apple was intentionally trying to run this company into the ground to buy their facilities later or this was gross mismanagement. I doubt it said anywhere in the contract that Apple reserves the right to engage in corporate sabotage.

    I'll take the cynicism elsewhere...
    2014-11-01 06:43 PM
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