After the uber successful unveiling of iPhone 6 Apple is possibly hit by a problem that can quite significantly affect Apple Watch’s production which is due early 2015. Apple’s partner GT Advanced Technologies which is supplying sapphire for Apple Watch’s display has filed for bankruptcy with the United States Bankruptcy Court and asked for bankruptcy protection and the closure of its facilities in Arizona and Massachusetts.
According to the court documents filed by GT Advanced Technologies, Apple is seemingly the cause of GT Technologies’ misfortune, since before partnering with Apple, GT Advanced Technologies was a dominant entity in the solar industry and after the partnership with Apple, GT Advanced Technologies had to shift from an “equipment manufacturer” to a sapphire materials manufacturer.
This seems to be the implication made by GT Advanced Technologies for its sudden collapse. Moreover, GT Advanced Technologies claims that the “burdensome” and “oppressive” agreements imposed upon it by Apple have been inharmonious with its business model, resulting in the depletion of its “resources.”
One of the statements GT Advanced Technologies has made in the court documents is the following:
“As discussed in detail in the Supplemental First Day Declaration, the agreements imposed oppressive and burdensome terms and obligations on GTAT. The contracts and leases…provide no benefit to GTAT’s estates, and GTAT’s continued performance under the Agreements is no longer a viable business option. GTAT has determined that the Agreements are no longer necessary for GTAT’s business operations. The Agreements also are not a source of potential value for GTAT’s future operations, creditors, or interest holders and constitute an unnecessary drain on GTAT’s resources.”
One might conjecture that GT Advanced Technologies is forging such claims in order to get out of a “bad” deal with Apple, but according to The Wall Street Journal, GT Advanced Technologies is actually in turmoil and is bent at closing its facilities in Massachusetts and Arizona, and the facility in Arizona is the one that is making sapphire for the Apple Watch. In addition, the closures would result in a layoff of 890 GT Advanced Technologies’ employees which Apple is trying to prevent by working with the relevant government departments.
The picture painted by GT Advanced Technologies is that working with Apple (read: making sapphire) is not in the best interests of the company and that it wants to terminate all agreements it has made with Apple. For further developments, we’ll have to wait until 15th October for the Court’s decision and as to which turn this roller coaster will take. Apple hasn’t commented on the issue so far, but it is concrete that Apple is none too happy about GT Advanced Technologies’ decision which it has dubbed as “surprising.”