Apple better have a backup plan for the sapphire screens on its upcoming Apple Watch. The situation with its sapphire partner GT Technology does not look good. The company filed for bankruptcy earlier this week, and now announced plans to close two of its sapphire plants in Arizona and Massachusetts.
890 people will lose their jobs. This contradicts GT's stated plans to continue business as usual, and it doesn't look good for GT's partnership with Apple.
Since GT is keeping the exact details of its situation under wraps, we don't know exactly what caused its current financial state and to what extent Apple was involved...but it's clear GT holds Apple at least partially responsible for this mess.
"GTAT believes that it has many claims against Apple arising out of its business relationship with Apple," the company said in a filing asking for authorization to shut down the plants. "Before the Petition Date, on October 31, 2013, GTAT entered into several agreements with or for the benefit of Apple. The agreements shifted the GTAT Group's sapphire-related business model from being primarily an equipment manufacturer/supplier to also being a sapphire materials manufacturer. As discussed in detail in the Supplemental First Day Declaration, the agreements imposed oppressive and burdensome terms and obligations on GTAT," the filing continues, laying the blame squarely on Apple.
I asked GT's lawyer Daniel Sklar to elaborate on what was "oppressive and burdensome."
"That's the part under seal," he wrote me in an email. Damn it.
I've emailed Apple to ask whether this will change its plans regarding the Apple Watch and will update if I hear back. [Wall Street Journal]