Bankruptcy court documents released Friday reveal new details about the falling-out between tech giant Apple Inc. and a sapphire glass maker that led to the shuttering of a huge new factory in metro Phoenix and the loss of hundreds of jobs.
GT Advanced Technologies and Apple have been at odds for several weeks over a 2013 agreement to produce sapphire glass at the Mesa factory — a deal that Arizona leaders hailed as a success story in their efforts to lure technology companies to the state.
GT Advanced Technologies filed for bankruptcy protection last month and began shutting down the factory as it negotiated with Apple over the fate of their deal. Apple had demanded that GTAT’s filings explaining what went wrong remained under seal, but the documents were released Friday under an amendment to a deal they reached a deal last month to wind down their relationship.
The documents detail the acrimony between the two sides.
In the Oct 8 filing released Friday, chief operating officer Daniel W. Squiller accused Apple of using a “classic bait-and-switch strategy” with a deal that he called “massively one-sided.” He said Apple offered to buy 2,600 sapphire-growing furnaces that would be operated by GTAT, but soon reneged on the deal and changed the terms.
Squiller said Apple then demanded a new deal in which GTAT would borrow up to $578 million from Apple for the furnaces and get repaid over the next four years, forcing the sapphire maker into the role of “captive supplier” in which it assumed all the risk and Apple was not on the hook for buying any of the product. The executive said the deal also prevented GTAT from doing business with any other electronics maker.
Apple currently uses sapphire glass for camera lenses and its fingerprint-reading home button on many new iPhones, and has announced its use on two of three planned models of the iWatch. The Mesa plant fueled speculation that Apple might use sapphire glass in future iPhones, but the newly released iPhone 6 does not use sapphire for its main screen.
In a separate filing, Apple lawyers accused the Merrimack, New Hampshire-based sapphire company of making false statements about the deal, among other allegations. Apple says GTAT was not forced into any deal because it was represented by “sophisticated outside counsel,” and it noted that the sapphire maker’s stock price soared when news broke about the agreement. Apple said it has “bent over backwards” to work with GTAT.
“Far from the villain in these Chapter 11 cases, Apple is the largest victim of (GTAT’s) failure to perform under the agreements it negotiated at arms’ length and with advice of counsel,” Apple lawyers said.
GTAT announced Thursday that the Securities and Exchange Commission has opened an inquiry into its business.
