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."

Comments

Than don't sign the contract

[ssufficool]

In other news: A company so desperate to get into bed with Apple signs away their soul for rainbows and promises.

Re:Than don't sign the contract

[Cesare Ferrari]

Indeed, sounds like a very one sided description of what went wrong. On the one hand, they say they are experts in doing something that other people couldn't, but then say it's apple's fault that their technology didn't work. Hmm, something wrong with this explanation.

Re:Than don't sign the contract

[Anonymous Coward]

it's a classic case of "customer knows better" and they have all the money so you have to do what they say.

GT is too excited to get into business with Apple. Apple is so excited about their super secret sapphire plant they won't let the people they PAID do the job they're PAID to do.

I've seen this at smaller companies all the time. Automakers are also famous for it. They sign up mom-n-pop shops and basically take them over till they run out of business... in the auto industry it's practically a revolving door of these type of deals.

Re:Yes, go ahead...Blame Apple

[Hognoxious]

Pray I do not change it further.

Can see how this happened

[russotto]

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.

Re:Then don't sign the contract

[Dogtanian]

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.