Apple Loses Sapphire Partner as GT Advanced Technologies files For Bankcruptcy
We were expecting to see the Apple Watch somewhere in the first quarter of next year with mass production of the device scheduled to begin in January 2015. However, there may be delays in the production of the device and even if production does start, there definitely will be shortage in the number of gadgets.
So, why do we say this? Well, it has been announced that GT Advanced Technologies, the company that has partnered with Apple to produce sapphire glass in Arizone has filed for bankruptcy protection. It wants to reorganize its business and the company is still looking to meet the promises it has made to Apple.
Why the application, you may ask? GT Advanced Technologies has taken quite a hit in its finances due to the company refocusing efforts to increase sapphire production for Apple rather than doing its usual business of selling furnaces. We assumed that Apple was pumping pre-payments into the company to finance the production but I guess, something went wrong somewhere or the cash flow just wasn’t enough to sustain the company.
This sudden filing might mean the worse for the Apple Watch production and some of the iPhone 6 models as sapphire glass was a huge unique selling point for the devices. Apple might decide to either continue production without the sapphire glass or find some other manufacturer who would be a more reliable partner. From the last check we’ve done, GT’s stock stopped trading prior to the announcement. Since then, the stock has resumed trading but is down 90 percent from original figures.
Apple has finally commented on the issue. Apple has told Reuters that the company was surprised by the filing and is trying to figure out what the company’s next steps are. And on top of this, we found why GT filed the application. It seems Apple withheld the final USD$139 million prepayment loan. This might be the straw that broke the camel’s back for GT. If only Apple had given the payment, if only.
On the bright side, KGI Securities Analyst Ming-Chi Kuo has commented that he does not think that the filing of the bankruptcy protection will actually affect the production of the Apple Watch. He does add though, this might affect future plans of Apple involving the sapphire glass in future devices. I guess the sapphire glass is way too much of a hassle. Production delays, partners filing for bankruptcy, complications in manufacturing processes…
The most fishy part of the whole story? It seems that GT Advanced CEO Thomas Gutierrez sold over 9,000 shares of GT Advanced stock just a day before Apple announced the iPhone 6 according to the Wall Street Journal. The timing is quite suspicious as he sold the shares just before the price dropped the following day after it was confirmed some units of the iPhone 6 variants did not include sapphire screens. Did he know all along about the situation and not tell Apple that the company was heading for financial problems? If that’s the case, Apple is going to be mad, real mad.