SHATTERED: Apple's jilted glass supplier to shut down sapphire ops

GT Advanced Tech to shutter factories, lay off 890 workers

Updated GT Advanced Technologies, the struggling materials firm that was once tapped to provide durable sapphire glass for Apple, says it will cut staff and close its sapphire manufacturing plants as it moves toward bankruptcy protection.

In documents filed with the New Hampshire bankruptcy court on Friday, GT said the "cash burn" at the facilities it set up to produce synthetic sapphire for Apple is "not sustainable," requiring it to shut down its factories in Mesa, Arizona and Salem, Massachusetts.

The Mesa facility was reportedly built with the help of $350m in loans from Cupertino.

Winding down its sapphire production operations will also mean the loss of some 890 jobs, the company said.

Not much is known about what caused GT's relationship with Apple to hit the skids. But when the new iPhone 6 and iPhone 6 Plus were unveiled and neither had a sapphire glass screen, it was clear that something was amiss.

Rumor has it that GT was unable to produce sapphire that met Apple's demanding standards – but then, neither was any other vendor.

Whatever its reasons, Apple reportedly withheld an additional $139m payment to GT, triggering the firm's current financial crisis. GT abruptly filed for Chapter 11 bankruptcy protection on Monday, which would allow it to reorganize its debts and continue operations – although that won't, apparently, include making sapphire glass.

As part of that process, GT has asked the bankruptcy court to vacate thirteen agreements it signed with Apple, which it claims saddled it with "oppressive and burdensome terms and obligations." Continuing to honor these agreements, the company says, "is no longer a viable business option."

Among the agreements listed in GT's court filings are a confidentiality agreement, an "Apple Restricted Project Agreement," and an "Apple Restricted Information Agreement," which presumably prevent GT from discussing its sapphire manufacturing operations in detail without incurring penalty charges from Cupertino.

GT's filing also hinted that bankruptcy isn't the only thing occupying its lawyers lately.

"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the company's lawyers wrote. ®

Update

An Apple spokesperson got back to us late on Friday evening with the following comment:

We are proud of the jobs we've helped create in Arizona through Apple’s domestic manufacturing initiative and our state-of-the-art facility powered entirely by renewable energy sources. We are focused on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps.

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