The US$439 million GT Advanced Technologies owes Apple is about to get resolved. The company's latest bankruptcy filings say it plans to sell off everything it can in an auction and hand over what's left to the iPhone and Apple Watch maker.
GTAT equipment auction will settle its score with Apple
GTAT struck a deal to make synthetic sapphire glass for iPhones, but failed to produce the quantity or quality Apple needed. Apple fronted $578 million to help the company ramp up its sapphire production and transition from being an equipment maker into a glass supplier, and bought a facility it leased to GTAT as a manufacturing facility.
Mounting costs, management issues, fights with Apple, and glass that wasn't up to specifications sent GTAT into a death spiral that led to its bankruptcy filing—a move that caught Apple off guard because GTAT's executives made no mention of the plan ahead of time.
Apple agreed to a lower settlement value to keep GTAT's bankruptcy proceedings on track while the company tried to sell off assets—including its sapphire furnaces—to pay off its debts. GTAT managed to sell some equipment right away, but hasn't had any luck since then.
With over 2,000 sapphire furnaces collecting dust for a year, and several companies wanting money from GTAT, the company proposed what amounts to a fire sale-style auction. GTAT will happen by November 23, according to the Wall Street Journal. The company plans to keep about 600 furnaces, sell what it can, and give the rest to Apple.
Apple plans to take whatever is left and scrap it, and has also been eyeing the building it leased to GTAT as a global command center. The facility did catch fire earlier this year, but the damage was limited to a section of the roof where solar panels were placed, so that shouldn't have a big impact on Apple's plans.
Apple will wipe away GTAT's debt once it takes possession of the remaining equipment, and the two companies will finally part ways. For GTAT, this is likely the best possible outcome from a worst case scenario, and for Apple it finally brings an end to a sordid and dysfunctional relationship with what could've been a major glass supplier.
We never did get sapphire glass-surfaced iPhones, although it is used on the stainless steel Apple Watch and Apple Watch Edition faces.
GTAT's proposal isn't, however, a done deal. The company still needs approval from the bankruptcy court. GTAT is hoping to get a hearing sometime next week, which would give it about two weeks to organize and complete its blow out auction.