GT Advanced, Apple’s key partner for the large-scale production of toughened sapphire glass, has filed for bankruptcy. However, this isn’t necessarily bad news for Apple.
Apple signed a deal with GT Advanced to run its yet-to-open sapphire glass production facility in Arizona. GT Advanced, with its expertise in the challenging material, would effectively be hired to do carry out the fiddly act of making the stuff.
However, in recent days, GT Advanced filed for Chapter 11 bankruptcy. This means that it will be able to continue operating normally without being obliged to pay its debts until it’s in a position to do so.
GT Advanced CEO Tom Gutierrez insists that the business is sound. “Today’s filing does not mean we are going out of business,” he said. “Rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.”
Sapphire glass is much more scratch resistant than the current toughened glass that makes its way into smartphone and tablet displays, and also much more flexible.
Apple has been using the material to cover its iPhone camera lenses and Touch ID home buttons in recent years, but it should start designing and making entire displays out of the stuff (presumably starting with the Apple Watch) once the Arizona facility is completed and comes online. Indeed, the fact that the iPhone 6 and iPhone 6 Plus displays weren’t made out of sapphire glass could be the reason behind GT’s troubles.
Interestingly, GT’s share price fell 13 percent immediately after the iPhone 6 unveiling, and Gutierrez is now in hot water for selling a load of stock just prior to that announcement.
This might all sound like bad news for Apple, but as SlashGear points out it might play right into the company’s hands. Apple actually lent GT Advanced the money to purchase all of the equipment needed to produce sapphire glass on a large scale. If GT fails to pay back that loan within five years, Apple would be within its rights to take control of the facility, essentially becoming an independent mass-producer of one of the hottest smart device materials around.
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