Apple is accused of being at the center of a classic case of ‘bait-and-switch’ with one of the company’s sapphire supplier GT Advanced Technologies.

Apple has once again found itself at the center of yet another controversy, but this time, the controversy is not surrounding a product that’s on the market – but rather a company that Apple had previously made a business arrangement with. The arrangement though is what is catching all of the recent heat and accusation.

GT Advanced Technologies, a company that was chosen by Apple to be a part of their sapphire production business for their iPhones – the coating that would find itself on the surface of most Apple products – reveals that Apple took aggressive, and even illegal actions to ensure that the company would ultimately crumble, or force them into selling the sapphire below market value.

Until the end of this past week, the filing with the federal bankruptcy court was under seal. The one that accused Apple of pressuring the company into signing the contracts with them by telling them to “Put on your big boy pants.” The court documents allege that this was a classic case of ‘bait-and-switch’ while Apple reserves that GTAT’s description of the partnership is nothing more than ‘slanderous’.

Most of the allegations come from GTAT’s chief operating officer Daniel Squiller who contended that “With a classic bait-and-switch strategy, Apple presented GTAT with an onerous and massively one-sided deal in the fall of 2013,” and that the company “Simply dictated the terms and conditions of the deal to GTAT.”

The financial collapse of GTAT was completely unexpected, and the lawyers for Apple had been fighting much of October to ensure that the details and accusations of Squiller and GTAT remained out of the public eye to ensure that “Apple’s image and reputation” were not “harmed” by the “defamatory statements alleging that Apple sought to dominate and control, strong arm, or take advantage of its suppliers.”

The deal that was signed in 2013 included $578 million in capital so GTAT could equip their facilities with the furnaces that would produce the high-quantities of sapphire, which Apple was attempting to get. However, due to cost overruns, production issues, and Apple’s general interference with the process – GTAT was forced to file for Chapter 11 bankruptcy in October.

The company blames Apple for the failure of the company, and has alleged that they are standing up for the companies that have to do business with Apple, and the soured relationships Apple has with the companies that produce the products that ultimately make their top-of-the-line smartphones, tablets, and computers.

2 COMMENTS

  1. Boo hoo, poor us. I promised something and when I could not deliver its all your fault! What about GTAT executives dumping all that stock? I am sure they are looking for a way to blame Apple for that one too. My guess is that just like all those .com’s that went bust 15 years ago, GTAT instead of buckling down and going to work were probably spending time and money on lavish celebrations all year long.

    • Apple called all of the shots in this failed venture. So who should take the blame? Apple.

      It was Apple that decided the buildout of the factory causing it to be late including the decision not to have backup generators. When it experienced power blackouts, the unfinished sapphire had to be scrapped and the growing process started all over again.

      It was Apple that decided which furnaces GTAT had to buy.
      It was Apple that specified the process to grow the sapphire and had their own people overseeing it at the factory.
      When the sapphire was finished, Apple did not buy it because it did not meet their standards so GTAT had to eat all the costs.

      Since Apple had complete control over every aspect of the venture you would think Apple would accept more responsibility for it’s failure and show GTAT some leniency instead of withholding the final loan installment or exercising accelerated repayment clauses.

      Read GTAT’s Bankruptcy Declaration describing the events leading up to the bankruptcy filing. It’s very telling to see how Apple treats their suppliers with such little regard http://www.kccllc net/gtat/document/1411916141028000000000004

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