GT Advanced Technologies, Apple’s sapphire supplier, is seeking bankruptcy protection.
The materials manufacturer, which had struck a $578 million deal to produce sapphire for Apple, began Chapter 11 bankruptcy proceedings on Monday. GT leadership stressed that the company is seeking bankruptcy protection so it can continue business as usual.
“GT has a strong and fundamentally sound underlying business,” said Tom Gutierrez, president and chief executive officer of GT. “Today’s filing does not mean we are going out of business; 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.”
GT had been ramping up production of synthetic sapphire for Apple at a huge plant in Mesa, Ariz. Many analysts predicted that Apple would swap out Gorilla Glass for sapphire on the screens of its next phones. But at a product event last month, Apple indicated that it would stick with Gorilla Glass for the iPhone 6 and 6 Plus. That spelled trouble for GT, said Eric Virey, an analyst at research firm Yole Développement.
“This is all connected,” he said. “Not having that smartphone really derailed all the plans.”
Still, Virey said GT’s bankruptcy filing took him by surprise as production at the Mesa facility had been accelerating in recent weeks. Though GT hopes to continue business as usual, the court proceedings could make it more difficult for the company to purchase the materials it needs to keep operating the plant at peak capacity.
“Potential creditors are going to be very wary,” he said.
Sapphire, which is clear in its pure form, is harder than glass, making it an appealing choice for smartphone screens. Though Apple is sticking with glass for the iPhone 6, the company has said that the Apple Watch will have a sapphire screen.
Apple was expected to use sapphire from GT for screens for the iPhone 6.
