New report details GTAT’s operational ineptness and technical problems with sapphire production
In the wake of GT Advanced Technologies’ bankruptcy filing, the company has been more than outspoken about the headaches it endured as a result of its its failed partnership with Apple.
From calling its contract with Apple “oppressive and burdensome” to accusing Apple of engaging in “bait and switch” tactics, GTAT court filings have portrayed Apple as a morally devoid goliath who improperly used its power to lure in and effectively trick a naive GTAT into an overwhelmingly one-sided contract.
But as you might have guessed, there’s more than one side to this story.
In a thoroughly researched article for the The Wall Street Journal, Daisuke Wakabayashi details that many of GTAT’s problems resulted from operational ineptness and technical troubles which plagued the partnership from the very beginning.
The Apple-GT marriage was troubled from the start. GT hadn’t mass-produced sapphire before the Apple deal. The New Hampshire company’s first 578-pound cylinder of sapphire, made just days before the companies signed their contract, was flawed and unusable. GT hired hundreds of workers with little oversight; some bored employees were paid overtime to sweep floors repeatedly, while others played hooky.
What’s more, the gargantuan sapphire boules GTAT assured Apple it could produce were often rife with problems, rendering many of them completely unusable. And with each boule reportedly costing upwards $20,000, not to mention scores of workers with no concrete work assignments enjoying unlimited overtime, GTAT soon found itself blowing through money at a rapid clip.
The report adds:
Manufacturing wasn’t the only problem. In August, one of the former workers said, GT discovered that 500 sapphire bricks were missing. A few hours later, workers learned that a manager had sent the bricks to recycling instead of shipping. Had they not been retrieved, the misfire would have cost GT hundreds of thousands of dollars.
What’s particularly interesting is that Apple seemingly made a good faith effort to help out GTAT with its financial troubles, offering them US$100 million of the $139 million loan it was scheduled to hand over. Additionally, Apple said it was willing to pay more for the company’s sapphire than initially agreed. The Journal relays that a meeting between Apple and GTAT to discuss specific financial terms was set for October 7.
On October 6, GTAT filed for bankruptcy, catching Apple, by its own admission, by surprise.
While the narrative of big bad Apple taking advantage of a smaller company certainly makes for a compelling headline, the reality is rather boring. GT Advanced was a sophisticated partner to the negotiations, undoubtedly equipped with a capable legal team of its own. The company wasn’t forced to sign on the dotted line with Apple. It did so willingly, with dollar signs in its eyes.
In short, GTAT made a calculated risk that could have paid off big time, but instead, went in the opposite direction.