14 DAY TRIAL // After filing for bankruptcy and laying off hundreds, sapphire maker GT Advanced has released an official statement announcing a settlement with Apple that involves selling off the furnaces but continuing their partnership under different terms.
GTAT has confirmed that its settlement with Apple will involve winding down its sapphire production at the company's Mesa, AZ and Salem, MA locations. It will also exit sapphire production to focus on supplying equipment and developing sapphire growth systems and processes, the company said.
Poor quality sapphire
The reason why GTAT’s sapphire was ultimately refused by Apple is said to be the quality of the material, but also the boule size, which Apple had hoped would be larger.
Under the terms of the settlement, “GT will be released from all exclusivity obligations under its various agreements with Apple [and] will retain ownership of all production, ancillary and inventory assets located in Mesa and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF sales.”
In short, GT is selling off the very furnaces used to cook the sapphire crystal to compensate Apple for its less-than-profitable partnership.
According to a redacted version of the settlement documents, “The agreement provides for a mutual release of any and all claims by both parties. As a result of the agreed upon terms, GT retains control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion, without restrictions.”
Mutual interests
Apple doesn’t want to get GT out of its life, and neither does GT want to fully exit its collaboration with Apple. According to the press release put forth by the sapphire maker, “GT and Apple will continue their technical exchange involving the development of processes for growing next generation sapphire boules as GT continues to build on its successfully deployed ASF115Kg technology and expand its range above 165Kg.”
Apparently, this is where Apple wanted to be as far as boule size is concerned. Which means that whenever GT can deliver, either through its own furnaces or via outsourced workforce, the partnership can be revived. Apple seems dead serious in using as much sapphire as possible in its devices.
One implication for this potential outcome is that the 2015 iPhone refresh – be it iPhone 6S or iPhone 7 – might finally include a sapphire display. A sturdier display is one of the top requests from customers worldwide, after battery life and screen size.
Hundreds being laid off, with more to follow
GT further confirms in its report that when it initiated the process of shutting down the Mesa facility, around 650 employees had been laid off, with additional reductions-in-force implemented.
Only a handful of Mesa employees “will remain on board to help with the wind down of the facility over the coming months,” said the company.
“We recognize and regret the impact that these actions have on our valued employees and their families and we are committed to supporting them through this transition,” said Tom Gutierrez, president and chief executive officer.