Earlier this week we reported that Apple and its failed sapphire supplier GT Advanced Technologies had reached an accord, agreeing to dissolve their partnership.
GT would be shutting down operations at the Mesa, AZ sapphire plant Apple helped them build, and would seek to sell off over 2,000 sapphire furnaces from the facility, with the majority of the proceeds going to Apple to help repay the $439 million in loans Apple made to GT to build the Mesa operations.
“Under the terms of the settlement agreement, which is subject to approval by the Bankruptcy Court, GT will be released from all exclusivity obligations under its various agreements with Apple. GT will retain ownership of all production, ancillary and inventory assets located in Mesa and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF® [Advanced Sapphire Furnace] sales. The agreement provides for a mutual release of any and all claims by both parties. As a result of the agreed upon terms, GT retains control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion™, without restrictions.”
Although the firms are putting an end to their production agreement, they will remain in contact, due to GT Advance’s continued research focused on producing larger sapphire boules of over 165 kilograms. Apple and GT will meet quarterly to review any possible progress, and the two could collaborate in the future if satisfactory progress is made.
GT’s financial troubles began as early as February of this year, as it was apparently unable to produce sapphire glass of the quality and amounts required by Apple. This led to Apple’s withholding of a final loan payment of $139 million, leading GT to pull the plug on the operation, although Apple reportedly continued to try to aid GT in an attempt to overcome their technical issues.
Roughly 650 employees have been laid off from GT Advanced’s Mesa, AZ sapphire plant, as the company wraps up sapphire production currently underway, and begins to decommission the furnaces for resale.
Meanwhile an Apple spokeswoman told Re/code the company is committed to working with the city of Mesa to find employment for the affected employees.
“Apple put a lot of effort into an ambitious new sapphire manufacturing process with GTAT which is not ready for production. We’re going to continue evaluating GTAT’s progress on larger sapphire boule development, as well as consider other options for the facility. We remain committed to the city and we’re going to work with Mesa and Maricopa County to help the GT Advanced employees who will be impacted by this find new jobs.”