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Behind Apple's Sapphire Screen Debacle
Frankie70 (803801) writes Apple invested more than $1 billion in an effort to make sapphire one of iPhone 6's selling point. But the iPhone 6 was released without the sapphire screen. GT Advanced Technologies, the small company chosen to supply Apple with enormous quantities of cheap sapphire, declared bankruptcy a month later. Recent documents from GT's bankruptcy proceedings, and conversations with people familiar with operations at Apple and GT, provide several clues as to what went wrong. GT said that to save costs, Apple decided not to install backup power supplies, and multiple outages ruined whole batches of sapphire. The terms Apple negotiated committed GT to supplying a huge amount of sapphire, but put Apple under no obligation to buy it. In its bankruptcy documents, GT would later accuse Apple of using "bait-and-switch" tactics, and said the terms of the deal were "onerous and massively one-sided."
In other news: A company so desperate to get into bed with Apple signs away their soul for rainbows and promises.
Maybe suppliers will now reconsider getting involved with Apple. Large companies with extreme market power will often bully their suppliers. It is common for large customers to make demands for price reductions below the contract price, with threats to dump the supplier if they refuse. Having a single customer that makes up most of your sales is a significant risk to any business and something that has to be carefully managed.
It's aluminum oxide. Basically impossible to accidently scratch. Can be made very Crack resistant if made correctly.
In its bankruptcy documents, GT would later accuse Apple of using "bait-and-switch" tactics, and said the terms of the deal were "onerous and massively one-sided." (Emphasis mine...)
And Apple gets blamed for this shortcoming? Why did GT sign on the god damned dotted line?
It's a freaking type of gemstone. It's blue... so when you see the blue gemstones on jewel encrusted whatevers, they'd be the sapphire ones. Have you been living under a rock? Yes, it can be made artificially and is very hard. It is why the best watch crystals are made of sapphire.
-- I ignore anonymous replies to my comments and postings.
Sounds an awful lot like Jack Tramiel's questionable business practices while at Commodore:
1. Make a large order to a supplier for parts
2. Supplier runs up costs and works to complete the order
3. Fail to pay the supplier in a timely manner
4. Let the supplier go bankrupt
5. Buy the supplier at liquidated prices
6. Profit!
READY.
PRINT ""+-0
Crystaline aluminum oxide (AL2O3) to be precise. This material is called ruby if it is red, or sapphire in most other colors (Provided it is of gem quality, otherwise it is just corundum regardless of color)
It is pretty much only diamond that can scratch sapphire.
It's not that cut and dried. Apple was the one who insisted on renegotiating the contract, as well as not installing a backup power supply for each furnace and starting production in a non-commissioned plant.
Apple originally offered to buy sapphire-growing furnaces from GT. But according to sources familiar with negotiations, after five months Apple demanded a major change in terms, requiring GT to supply the sapphire itself. In fact, Apple wanted GT to build the world’s largest factory to produce the stuff—more than doubling the world’s entire sapphire production capacity.
Producing sapphire requires a very clean environment, but ongoing construction at the factory meant that sapphire was grown "in a highly contaminated environment that adversely affected the quality of sapphire material," according to GT. It also requires uninterrupted supplies of water and electricity to regulate the temperature of the molten aluminum oxide used to form the boule. GT said that to save costs, Apple decided not to install backup power supplies, and multiple outages ruined whole batches of sapphire.
Make no mistake about it - Apple was in the driver's seat in this mess. It was their deadline for the iPhone6 that set the stage for attempts to grow sapphire in an unfinished factory. But Apple will find a way to make money out of this.
"Transparent" is a shit show that trades on every stereotype going. A man in drag is NOT a transsexual.
IBM had used Micropolis drives back when 5MB was a common size. They insisted that Micropolis buy new production equipment to make the 40s in enough quantity to supply the projected PC demand, then IBM chose another vendor, leaving Micropolis with a lot of production capacity for which to pay, and no customer. Bye-Bye, Micropolis.
The salespeople saw money. The business people, who would normally assess risk, got blinded by the prospect of making huge amounts of money. The engineers who could see disaster coming were not consulted or ignored.
Not much sympathy for either party from me, as I'm sure both companies understood the nature of the contract. I wonder, though, how much it has cost Apple in sales and good will to be putting out a product without the top-of-the-line screen. Probably a lot more than they were trying to squeeze out of this deal with their ruthless negotiating tactics. This is the sort of thing Stephen Covey (7 Habits of Highly Effective People) was going on about when he advocated seeking out the win-win deal. If your partners don't prosper, it will always come back to hurt you.
it would take an extremely good businessman to [terminate] at that point, most would already be counting the money Apple would make them. But if a deal is wrong you need to walk away. They're hardly the first company to fail because they made a bad decision to take on a contract they weren't ready for.
The Register ran an opinion piece when the details on this story were first appearing a couple of weeks back. It noted an almost unbelievable point others have commented on elsewhere in this thread:-
[The usual form of the contract is that companies agree] to build whatever to [the agreed] standard and by that time. Excellent. If we do so then you have to either take them and pay for them or if you don't take them you've still got to pay for them. If we don't make them to standard or in time then here's the damages we'll pay. But if we hit the spot then you're committed to pay for them.
But here's what it actually did sign up to:
Those agreements, said Daniel Squiller, GTAT's chief operating officer, were almost entirely one-sided. By the time Cupertino's lawyers were done, he said, GTAT was presented with an deal that, among other terms, required it to: commit to producing millions of units of sapphire, even though Apple was not obligated to buy any of them.
Something the author describes as "sheer lunacy". Either they were utterly, *utterly* struck blind or there is something strange and dubious going on. Oddly, the "struck blind" explanation isn't as improbable going by a comment in the letters section (from "Edwin"):-
The sexiness of having Apple (or some other A-list brand) as a major customer is extremely seductive to many 'executives'. Not only because it's great advertising, but the bolstering of the supplier's individual executive ego.
"Slashdot - News and Chat Sites Deviant". (Click "homepage" link above for details).
GT never produced sapphire prior to this arrangement, they manufactured photo-voltaic silicon. Apple was looking to produce sapphire on a scale needed for their iPhone, something nobody had done before. GT convinced them they could do it. Apple required an exclusivity clause because they didn't want to invest any money unless they got all the sapphire and in return, the production process would be owned by GT. Apple bought the facilities in Arizona and loaned GT money to manage the operations. It was a large gamble that GT was willing to take. Apple's position carried less risk because they have a strong cash position and could continue to use Gorilla glass. When production yields where bad and GT didn't meet its obligations, Apple decided not to buy any sapphire. For its part, Apple did agree to renegotiate the contract to help GT, as they held out hope that GT could perfect the process after the iPhone 6 shipped. Unfortunately, GT's cash position deteriorated to a point where they needed bankruptcy protection.
" Is anything LESS scratch resistant than a soft metal like aluminium? Does no-one here have even a basic understanding of material science."
Do you even have a basic understanding of mineralogy, let alone the Moh's scale of hardness, let alone basic chemistry to apply to those two particular topics?
Because you certainly seem to not have it.
Still waiting on Serviscope_minor to wake up to fucking reality and realize that Jessica Price isn't going to fuck him.