GT Advanced Technologies (or GTAT, for short) has filed for chapter 11 bankruptcy protection after the company struck an agreement with Apple late last year to manufacture sapphire crystal displays for the Apple iPhone 6 and iPhone 6 Plus.
GT believed that the Mesa, Arizona plant, constructed to allow Apple to manufacture its sapphire crystal displays, would help the company in the long-term – seeing that Apple’s iPhone is always a best-seller, particularly in the United States. The agreement required Apple to give GT $578 million as a startup loan, with the company owing the money back in 2015. GT had not yet received the last $139 million (which was due at the end of this month).
In the company’s Chapter 11 bankruptcy filing, GT said that Apple’s decision to not press forward with its sapphire displays in the iPhone 6 was the catalyst for the bankruptcy declaration by the company. Just one month ago, before the iPhone 6 and iPhone 6 Plus announcement, GT’s stock stood at $17 a share due to sapphire crystal display rumors surrounding Apple’s next iPhones. Friday, GT’s stock price dropped 31% — and the company stock price now stands at less than $1 per share.
GT’s financial misfortune further plunged when the company filed Chapter 11, seeing that its $1.5 billion market value disappeared in a matter of minutes. GT has appealed to a court judge to free the company from its 12 contractual agreements with Apple so that the company can return to selling sapphire equipment and start churning profit so as to save the company. The Chapter 11 bankruptcy filing will remove 890 of GT’s 1,100 full-time jobs in an effort to minimize the financial loss as best as possible.
A number of analysts still believe that, despite the shutdown of the Mesa, Arizona plant, the Apple Watch will still arrive to the market in February 2015. Since Apple’s watch displays require a lot less sapphire crystal than the iPhone, Apple should have no problem getting the displays manufactured within the next few months. At this point, however, it’s rather close to the Apple Watch release date, but Apple has bounced back before.
At the same time, Apple may find itself in a risky position with other manufacturers as a result of the GTAT bankruptcy filing. GTAT may return to its former work of selling sapphire equipment, but other companies may look at Apple as a risky company with which to do business in the future. GT said that the Apple agreements placed “financial drain” upon the company, and other manufacturers may not want to accept the risks to do business with Cupertino.
Last but not least, we here at Inferse extend our condolences to the 890 GT employees who’ll no longer retain their jobs due to the company’s financial fall. Whenever tech deals fall through, some giants like Apple can bounce back and, with a change of mind, sell iPhones and make millions of dollars – while others, like GT, fall apart in the process. Technology is never done in a vacuum as the soon-to-be-unemployed GT employees can attest.