Apple “surprised“ by GT Advanced's bankruptcy filing
09 October 2014
Apple Inc has expressed surprise at GT Advanced Technologies Inc's bankruptcy filing and said it was considering its next move.
GT Advanced, which was to supply scratch-resistant sapphire displays from a new Arizona factory that Apple was also helping bankroll, filed for bankruptcy on Monday offering no reason. The company said in its first public response that it was working with Arizona officials on its next moves.
According to spokesman Chris Gaither, the company was focused on preserving jobs in Arizona following GT's move and it would work with state and local officials as it considered its next move.
Meanwhile, the new iPhone 6 models, which many had expected to show up some sapphire production, ended up not using sapphire cover glass.
Yesterday, the company said it would file for bankruptcy as a way to ''rehabilitate'' its business, causing the shares to fall over 90 per cent.
According to GT's latest 10-Q filing, the facility in Arizona is owned by an Apple (AAPL) affiliate, and was leased to GTAT for the purpose of sapphire manufacturing. In addition, the prepayment made to GT was structured as secured debt, with the sapphire manufacturing equipment pledged as collateral. Finally, Apple has already been granted a licence for certain sapphire related IP by GTAT, and Apple has the right to purchase a licence for additional IP at AAPL's option.
Based on these details, following GTAT's bankruptcy, we would expect Apple to simply take possession of the equipment that acted as security for the prepayments (particularly since Apple owns the building), and for Apple to exercise their option to purchase any sapphire IP that they haven't already licensed.