Apple Sapphire Glass Supplier GT Advanced Files For Bankruptcy

mrspoonsi writes GT Advanced Technologies is filing for bankruptcy. In an announcement on Monday, GT Advanced, which makes sapphire displays that many investors hoped would be in Apple's newest iPhone, said that it was filing for Chapter 11 bankruptcy. In early September, shares of GT Advanced got crushed after the company's sapphire displays were not in the latest version of Apple's iPhone 6 and 6 Plus. GT Advanced, however, signed a multi-year agreement with Apple last November to supply the company with sapphire material. That agreement included a $578 million prepayment, which GT Advanced is set to repay Apple over a five-year period starting in 2015.

Comments

How can you

[mrspoonsi]

get a $578M prepayment and go bankrupt in 10 months?

Re:How can you

[Anonymous Coward]

Ask Obama, Solyndra demonstrated how easily it can be done.

Re:How can you

[ShanghaiBill]

What I don't understand is how to burn through 578 million dollars in 10 months.

Bankruptcy does NOT mean you have $0 in your checking account. It simply means that your liabilities exceed your assets, your business prospects are unlikely to change that, and your creditors are unwilling to take a voluntary haircut. So you declare bankruptcy, and get a court imposed settlement between you and your creditors. You can usually continue to do business both during and after the bankruptcy.

At least in America, having at least one bankruptcy under your belt gives you some street cred with future investors, as long as you appear to have learned from your mistakes.

Re:How can you

[ShanghaiBill]

Care to expand on this?

Plenty of private investors had looked at Solyndra and declined to invest. It was already apparent that Solyndra had bet on the wrong technology, and their manufacturing costs were uncompetitive. They were using questionable accounting to cover up their problems. When news got out that the government was thinking of giving them a half billion taxpayer dollars, lots of people started raising red flags. Many people, both inside and outside the company, already knew that Solyndra was a sinking ship.

Two lessons that should have been learned from the Solyndra debacle, but were not:
1. The government should stick to funding basic scientific research, and refrain from "picking winners" by investing in private businesses. It is far better to leave that to people investing THEIR OWN MONEY.
2. If the government ignores lesson #1, and wants to invest anyway, on the theory that politicians are smarter than markets, then they should pair tax dollars with private investments, and only invest a limited percentage, in businesses that have been vetted by private investors.

Re: How can you

[Anonymous Coward]

Apple seems to be flexing their celebrity status a bit - inventing boom 'n' bust stocks that suck money out of potential investors while simultaneously incurring no net losses. Next: Apple agrees to buy GT assets for pennies on the dollar thus getting a sapphire processing facility and inventory on the cheap. GT staff will be laid off until Apple decides when the right time to check boxes on the marketing sheets. GT have no choice in this because, heck, they're already bankrupt. Apple can name their own price here because they have that heavy-handed obligation resting over GT like an executioner's axe.

Good deal: Apple gets cutting edge equipment on the cheap, investors get screwed, staff gets screwed. It's a win-win for Apple stockholders.

Also: Celebrities tend to be finicky friend-a-days. Self-absorbed egotistical dicks with a penchant for self-gratification and no remorse when they fuck people over.

Re:How can you

[ColdWetDog]

Why can't the government fail, just like a 'regular' investor? While I actually don't disagree - I think the role of government is in basic research, but the analogy holds. Both basic research and applied investing can fail. The former might result in an idea that didn't pan out, the latter results in an investment that didn't pan out. Investments are never guaranteed.

This doesn't mean that Solyndra wasn't screwed up for reasons that you mention, but I have no real beef about the government losing money on investments. It is something they're good at (losing money, that is). Always work to your strengths.

Re: How can you

[Ol Olsoc]

Apple seems to be flexing their celebrity status a bit - inventing boom 'n' bust stocks that suck money out of potential investors while simultaneously incurring no net losses.

You mean like expecting a working product, and not getting it because it doesn't work, but you expect them to pay for it?

I think you're just pissed that the sapphire screens didn't ship with the iPhone 6, so you can't go "See? SEE? Apl Sukz! Android! Rulez!"

So now you're reduced to complaining that they aren't going to pay for something that doesn't work.

Re:How can you

[RavenLrD20k]

Yeah...you missed the non-partisan view of the logic stream. Allow me to show how things played out without the republican or democrat filters. Bush looked at Solyndra and tried to push to invest in it...but the administration ran out of time during a political time sink. Obama's administration took over and continued the efforts of the previous administration to invest. So basically you have the fact that the idea was started by one round of idiots and pushed forward (or at the very least, not stopped) by the next round of idiots and through both rounds of idiots the American people got shafted. Same story as what always happens in politics...with the supporters of idiot circle A blaming idiot circle B for the issue, and idiot circle B supporters blaming idiot circle A...perpetuating the huge ass political circle jerk of finding someone to blame for a problem instead of working on actual solutions and thus letting things continue to spiral out of anyone's control all the while blaming the other guy for not taking responsibility of the control stick and letting the flat spin continue.

Round and Round she goes, where she stops nobody knows. So goes American Roulette

Re:How can you

[Squirmy McPhee]

A lot of companies used CIGS or CdTe.

"Used" is the key word here.

Because you can more easily use print and roll technologies and get fabrication costs down.

In theory. In practice, almost everybody who has tried it has failed. Thin film PV requires very large sheets of very thin layers that are also very uniform. It's not an easy task, and those who have solved it have not been eager to share how they did it. Nor have they been able to maintain their cost advantage against silicon PV.

Examples include FirstSolar and NanoSolar.

I'll grant you that First Solar is doing just fine, but not only has Nanosolar been unsuccessful, it doesn't even exist anymore. The only reasonably successful CIGS manufacturer to date (as defined by having a production volume similar to that of mid-sized silicon PV companies) has been Frontier Solar, and they ain't exactly cheap.

What the Chinese managed to do was lower the costs enough using conventional technology pushed to the limit that the advantages of low temperature manufacturing without requiring silicon ingot formation

Huh? Low-temperature manufacturing? No ingots? I monitor Chinese PV manufacturing practices like it's my job. Because it is my job. I've been inside the fabs. I know the people who develop the technology. I assure you that they process their silicon and their wafers at the same temperature as everybody else, and that every single one of them is using ingot-based wafers. What the Chinese managed to do was develop an extensive local supply chain, then squeeze the crap out of everybody's profit margins when times got tough. Low labor cost played a role too, though with rapid wage inflation, the low labor intensity of solar cell production, and the increasing automation of solar module production, labor cost is not really much of a factor anymore.

Possible sequence

[Mike_EE_U_of_I]

I don't know that this is what happened, but it seems likely.

1) Apple wants to use sapphire for main glass in Iphone.

2) Apple signs contract with GTAT to supply the sapphire, including a pile of money to build sapphire production facilities.

3) Apple pushes all risk onto GTAT. IOW, if Apple decides not to use the sapphire for the displays, GTAT has to repay the pile of money from step 2.

4) Apple does not use sapphire. GTAT can't repay money because they already spent it building sapphire production lines which no have no demand.

5) GTAT declares bankruptcy.

Re:Possible sequence

[Kenja]

You forgot step 3.5) Where the "sapphire glass" turns out to not meet the specifications Apple requested and GTAT committed to providing.

Re:Possible sequence

[bill_mcgonigle]

6) the governments socialize the losses of GTAT onto all of the companies that GTAT owes money to. Had GTAT and Apple succeeded, all of the profits would have been private, mostly recognized in Cork.

Three cheers for corporate welfare!

Re:Possible sequence

[AmiMoJo]

According to TFA the sapphire was never intended for the iPhone. That was just stupid investors hoping it would be, and then being disappointed when it wasn't.

The iWatch will use sapphire glass, as many watches already do. This is bad for Apple and anyone else who uses GTAT though, because through no fault of their own they were forced into bankruptcy and may now find it hard to meet demand when iWatch production ramps up.

Re:Possible sequence

[pnutjam]

...when iWatch production ramps up.

So, basically never.