Apple Inc. (NASDAQ:AAPL) has finally revealed the fine details of its failed association with GT Advanced Technologies Inc (OTCMKTS:GTATQ), in a letter to its creditors. From the emerged details, it appears that GT Advanced was extremely inexperience in production operations and its inability to lead the project led to the termination of $578 million contract.
From Beginning to End
Apple Inc. (NASDAQ:AAPL) detailed out the events that occurred right from the beginning to end, following GT Advanced filings seeking postponement of Apple’s settlement agreement. The talks between Apple and GT Advanced began in March, 2013, when latter approached Apple and informed about its advanced sapphire furnace capability.
Apple then decided to give the Sapphire puck production responsibility to GT in consideration of $500 million. It leased out Mesa, Ariz plant to GT for $100 per month. Eventually, GT’s poor operation management and lack of expertise came open during the initial stages of production itself. Resultantly, half of the boule produced at GT led Mesa furnace turned into waste and Apple received just 10% of the target yield.
Settlement Deadline Extended
Other than poor yield, GT just had too many problems to deal with it. GT kept hiring too many employees even when it really didn’t have work to assign to them, who in turn, exploited resources of the company. In September, GT finally submitted its financial health status before Apple Inc. (NASDAQ:AAPL).
Despite irregularities and failure of contract deliveries, Apple gave nod to pay $100 million out of agreed $139 million to GT and was willing to extend repayment due dates. Till such time, Apple had already paid out $439 million to GT. On Oct. 7, 2014, GT Advanced filed for bankruptcy and has accepted to settle $439 million due to Apple through sale of its more than 2,000 furnaces. Meanwhile, GT Advanced creditors have been successful in extending the deadline for such settlement.
