Ex-Apple Supplier Says A Soured Deal With Apple Forced It Into Bankruptcy

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Sapphire

Screenshot/GT Advanced

Apple had planned to use sapphire on the iPhone 6.

A former Apple supplier, GT Advanced Technologies (GTAT), is in the middle of filing Chapter 11 bankruptcy after a potentially lucrative partnership with the tech goliath fell apart.

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We're now GTAT's take on why the partnership crumbled, thanks to a recent court filing from Daniel Squiller, GTAT's chief operating officer.

GTAT was long-rumored to be making sapphire display covers for the iPhone 6.

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When news broke that Apple wasn't in fact using the sapphire for its main display, shares of GTAT tanked. The company then filed for Chapter 11 bankruptcy, which means it can reorganize and continue doing business. But it isn't a great sign for GTAT.

Squiller paints a bleak picture of the company's Apple partnership - from GTAT's perspective - suggesting the sapphire furnace manufacturer didn't anticipate the factors that caused it to file for bankruptcy protection.

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"GTAT incurred losses - resulting in the current liquidity crisis - that GTAT believes were due largely to actions not within its control," Squiller said. He also said the bankruptcy was necessary because its relationship with Apple had become "unsustainable."

Here's was the original deal between Apple and GTAT, according to Squiller:

The essence of the transaction was for GTAT to install in excess of 2000 sapphire-growing furnaces to be operated in a facility provided by Apple. GTAT would operate the furnaces to produce large quantities of high-quality sapphire for use in Apple's products. The transaction had the potential to be revolutionary for GTAT's business and a significant achievement for Apple.

However, the deal fell apart after GTAT wasn't able to make enough sapphire crystal in time for the deadline the two companies agreed on. GTAT also said it wasn't able to market its sapphire material and equipment overseas because of exclusivity provisions in its deal with Apple.

Squiller ultimately lays GTAT's bankruptcy at Apple's feet.

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"Given the severity of the losses incurred as a result of the transactions with Apple and the terms of the Apple Agreements, GTAT had little choice but to commence these Chapter 11 cases," Squiller said.

However, he did add this caveat to the statement he filed in court: "GTAT is well aware, and the Court and the parties in interest should expect, that Apple would vigorously dispute any attribution of responsibility to Apple for the failure of the sapphire growth and fabrication project or for GTAT's chapter 11 filing."

We've reached out to Apple for comment and will update this post if we hear back.