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Apple's ill-fated partnership with sapphire maker GT chronicled by WSJ

Apple's ill-fated partnership with sapphire maker GT chronicled by WSJ

November 20, 2014

About a month after Apple and GT Advanced Technologies announced a deal that would make for an “amicable parting of the ways,” The Wall Street Journal has published a new report chronicling the events leading to the split between the tech giant and its erstwhile sapphire supplier.

In a nutshell, the report says of the breakup:

The Apple-GT marriage was troubled from the start. GT hadn’t mass-produced sapphire before the Apple deal. The New Hampshire company’s first 578-pound cylinder of sapphire, made just days before the companies signed their contract, was flawed and unusable. GT hired hundreds of workers with little oversight; some bored employees were paid overtime to sweep floors repeatedly, while others played hooky.

The ill-fated partnership was formed as a result of Apple’s search early last year for a company to supply the sapphire coating of its next-generation iPhone’s screen. GT then presented itself to Apple, saying that it was developing a furnace capable of producing a large sapphire cylinder or boule that would yield more screens at lower costs.

Apple initially planned to buy 2,600 units of the furnace, but later asked GT itself to make the sapphire. “Apple offered to lend GT $578 million toward building 2,036 furnaces and operating a factory in Mesa, Ariz.,” The Wall Street Journal reports. “Apple would buy and retrofit the factory for an additional $500 million and lease it to GT for $100 a year.”

Realizing that the sapphire production agreement would result in more revenue than furnace orders, GT signed a deal with Apple on Oct. 31 of last year. That was just a few days after the first 578-pound sapphire cylinder emerged from one of GT’s much vaunted furnaces.

Seemingly an ill omen of things to come, the boule came out so cracked as to render its sapphire unusable. But GT promised Apple that subsequent yields would have improved quality and went on a hiring spree. GT hadn’t built enough furnaces at the time, though, and many workers were left with nothing to do as far as sapphire production was concerned.

What little sapphire GT managed to produce, however, was still mostly unusable, with rejected cylinders stored in a so-called “boule graveyard” in an area of the Mesa plant.

It soon became apparent that sapphire wouldn’t make it to the screens of the new iPhones, which were later revealed to be the iPhone 6 and the iPhone 6 Plus on Sept. 19.

On Oct. 6, GT filed for bankruptcy, a move that reportedly “surprised” Apple, which had been negotiating with the beleaguered company so as to allay its financial difficulties.

As part of its settlement with Apple, GT has had to wind down its factory in Mesa, affecting up to 890 workers in the process. Apple, however, has announced its plans to repurpose the plant in its commitment to bringing jobs and manufacturing to the area.

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