Apple supplier GT to drop sapphire ops, asks bankruptcy plan remain secret
By Ted Siefer and Tom Hals
MANCHESTER N.H. (Reuters) - GT Advanced Technologies Inc GTAT.O on Thursday revealed it intends to wind down sapphire production, cutting short its once-promising bid to supply the scratch-resistant material for Apple Inc's (AAPL.O: Quote) iPhones and other mobile devices.
Scant information has emerged since GT Advanced filed unexpectedly for bankruptcy on Monday, wiping out most of its market value and triggering speculation as to what may have soured its Apple relationship and torpedoed its prospects.
At the first public hearing since Monday's filing, lawyers for GT Advanced argued it could not reveal why it sought bankruptcy and asked a court to keep crucial documents sealed, a highly unusual move that may keep investors in the dark for now about its financial implosion.
A lawyer for the company said a confidentiality agreement prevented it from revealing its Chapter 11 game plan. The company told the U.S. Bankruptcy Court it was barred from disclosures because it was "tied up in knots" by that pact.
Apple, which zealously guards the secrecy of its product pipeline, has been known in general to place strict confidentiality requirements on its many suppliers.
Industry insiders and Wall Street analysts have speculated that GT Advanced's woes may have arisen from its half-billion dollar sapphire-supply deal, under which Apple helped bankroll a manufacturing plant in Mesa, Arizona, on the condition that GT hit certain operational targets.
Under terms of the deal, Apple would provide a total prepayment of about $578 million to help install furnaces and other gear in the factory, which would be owned by Apple and slated to employ more than 700. Apple would then be paid back over five years starting 2015.
Some analysts have speculated that GT Advanced may have had trouble hitting its targets. A source familiar with the situation has said that Apple tried to help the supplier meet those milestones. Continued...