GT Advanced COO blames Apple for bankruptcy in detailed court declaration<div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even" property="content:encoded"><p><a href='
http://www.imore.com/gt-advanced-coo-blames-apple-bankruptcy-detailed-court-declaration' title="GT Advanced COO blames Apple for bankruptcy in detailed court declaration"><img src='
http://www.imore.com/sites/imore.com/files/styles/large_wm_brw/public/field/image/2014/10/macro_iphone_6_isight_camera_truetone_flash_2.jpg?itok=vVR904MK' />[/url]</p> <p>In a Chapter 11 bankruptcy filing for
GT Advanced Technologies, the company's chief operating officer Daniel Squiller gave some explanation in a Supplemental Declaration to provide information about what went wrong in the deal that would have GTAT produce sapphire for Apple. Citing changes in specs later in the negotiation period leading to higher than anticipated manufacturing costs, an obligation to produce solely for Apple whereas Apple doesn't have to buy any of the sapphire produced by GTAT, and GTAT's inability to take control of the fabrication process from Apple, Squiller said that GTAT had no other choice but to file for bankruptcy.</p> <!--break--> <p>Despite Apple's claims that it was
surprised to hear that its sapphire manufacturing partner had filed for Chapter 11, Squiller says Apple was notified and that both companies worked to amend the terms with no success:</p>
<p>While Apple responded with various proposals, after intense negotiations, none of Apple's proposals solved the economic issues in an effective manner, and GTAT believed that acceptance of such proposals would have exposed GTAT to further risk.</p>
<p>Under the initial agreement with Apple, Squiller is painting a picture that GTAT shouldered more of the risk:</p>
<p>Under the new structure, Apple would act as a lender and would have no obligation to purchase any sapphire furnaces, nor did it have any obligation to purchase any sapphire material produced by GTAT. At the same time, GTAT would be precluded from doing business with any other manufacturer in or supplier to the consumer electronics market.</p>
<p>And because of Apple's demands and changes, GTAT incurred roughly $900 million in losses:</p>
<p>Due to losses associated with the development of the technology in accordance with Apple's requirements, including new issues associated with manufacturing 262kg boules and changes in product specifications, GTAT ended up bearing the costs of more than 1,300 temporary and permanent personnel, utilities, insurance, repairs, and raw materials with minimal revenue output. The total cost incurred by GTAT pursuant to the project with Apple has so far amounted to approximately $900 million.</p>
<p>There were also fines if GTAT did not meet oblications to Apple or if it violated its exclusivity contract with Apple by selling to another customer.</p> <p>Squiller says that Apple took control of the fabrication process while GTAT was in control of the growth process. Squiller cites that due to decisions made by Apple, delays and problems surfaced that resulted in monetary losses to GTAT.</p>
<p>GTAT believes that it was unable to achieve its planned fabrication cost and production targets because many of the tools did not meet their performance and reliability specifications. Over time, a majority of the selected fabrication tools had to be replaced with alternative tools... The fabrication cost was approximately 30% higher than planned, requiring nearly 350 additional employees and significantly higher consumption of diamond wire and other wear items than originally planned. GTAT was required to absorb these additional costs</p>
<p>Another such operational cost that GTAT had to absorb is such:</p>
<p>After much discussion, it was determined that implementing power back-up for the furnaces was too expensive and, therefore, non-essential. That decision was not made by GTAT. On at least three occasions, power interruptions occurred, leading to significant delays and losses of whole production runs of sapphire boules. GTAT's losses to date resulting from power outages at the Mesa Facility exceed $10 million.</p>
<p>You can view the embedded filing below:</p> <p style=" margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;"> <a title="View GTATUNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIREAPPLE on Scribd" href="
https://www.scribd.com/doc/244902464/GTATUNITED-STATES-BANKRUPTCY-COURT-DISTRICT-OF-NEW-HAMPSHIREAPPLE" style="text-decoration: underline;">GTATUNITED STATES BANKRUPTCY COURT DISTRICT OF NEW HAMPSHIREAPPLE[/url] by <a title="View 925waccnt's profile on Scribd" href="
https://www.scribd.com/925waccnt" style="text-decoration: underline;">925waccnt[/url]</p> <iframe class="scribd_iframe_embed" src="
https://www.scribd.com/embeds/244902464/content?start_page=1&view_mode=scroll&access_key=key-nR86vGpvHhJNqiqLfXyT&show_recommendations=true" data-auto-height="false" data-aspect-ratio="0.7729220222793488" scrolling="no" id="doc_8871" width="100%" height="600" frameborder="0"></iframe> <p>What do you make of the allegations detailed by GTAT's Squiller? We have yet to hear
Apple's side of the story. These claims by GTAT shouldn't be too shocking given that the company had said a day earlier that it
couldn't afford to not settle with Apple.</p> <p>Source:
Scribd</p> </div></div></div><div id="comment-wrapper-nid-28032"></div><img width='1' height='1' src='
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GT Advanced COO blames Apple for bankruptcy in detailed court declaration
