© george tsartsianidis dreamstime.com Electronics Production | October 09, 2014
Apple equally surprised by GT bankruptcy filing
If you read Evertiq the other day, you probably know that Apple-supplier GT Advanced Technologies decided to file for chapter 11 – a move that seems to have caught even mighty Apple by surprise.
GT Advanced Technologies, working with sapphire-glass products for the solar industry and - more recently - consumer electronics, filed for chapter 11 earlier this week; after being left out of the new Apple iPhones. This moved has stunned investors and analysts alike, with GT having a rather strong cash position and last year receiving a prepayment from Apple. Wall Street Journal writes in a new report that Apple calls the bankruptcy filing ”a surprising decision”. A source was cited with saying that Apple has tried to keep GT solvent in not demanding repayment for the loan at a rate which they could have applied. It was late last year that GT announced a partnership with Apple, opening a new market segment for the company. Apple bought the giant facility in Arizona, leasing it out to GT, by then a producer of furnaces for producing sapphire. This enabled GT to start producing the material itself. Apple also agreed to lend GT some USD 578 million to outfit the factory. Wall Street Journal's sources say that three out of four payments (totalling USD 439 million) has been made, even though GT hasn’t reached the outlined technology goals set for the plant. To make matters worse, WSJ concludes, the material performed poorly when it came to testing, leaving GT with a giant factory in construction, a massive debt to Apple – and a lot to prove in order to keep the company running.