Apple reaches deal with GT Advanced Technologies to end sapphire production
Apple reached a deal with GT Advanced Technologies to end the production of its sapphire materials for the iPhone. Apple will recover $439 million in payments.
Apple CEO Tim Cook speaks during an Apple event announcing the iPhone 6 and the Apple Watch at the Flint Center in Cupertino, California, in this September 9. GT Advanced Technologies Inc, Apple Inc's partner in a sapphire glass plant in Arizona, filed for bankruptcy on Monday in a stunning turn of events for a company whose fortunes looked bright only a few months ago. The stock fell more than 90 percent to 75 cents, wiping out nearly all of its $1.5 billion market worth. GT was worth more than $2.8 billion in early July on hopes of its scratch-resistant sapphire glass being a part of the new iPhones.
Stephen Lam/Reuters/File
GT Advanced Technologies Inc said it reached an agreement with Apple Inc under which it will stop making sapphire materials and focus on supplying equipment to make sapphire crystals.
GT said it would be released from all exclusivity obligations with Apple and a mechanism would be provided for the iPhone maker to recover its $439 million pre-payment to the company, without interest.
GT, a former supplier to Apple, filed for bankruptcy on Oct 6 in a stunning turn of events for a company whose fortunes looked bright only a few months ago.
Few details have emerged since the filing, which wiped out most of GT's market value and triggered speculation on what may have soured its relationship with Apple.
At a hearing this week at the U.S. Bankruptcy Court in Springfield, Massachusetts, GT said the expected deal with Apple would save money and allow it to be more open about its mysterious Chapter 11 filing.
GT said on Thursday it would shut down its sapphire production factories in Mesa, Arizona and Salem, Massachusetts. It has laid off about 650 employees at the Mesa plant and expects additional job cuts in Salem.
GT will retain control of its intellectual property and will be able to sell its sapphire fabrication technology without restrictions, it said in a statement.
GT said it would continue its "technical exchange" with Apple but did not provide details about the nature of its future relationship with Apple.