Sapphire Supplier GT Advanced Accuses Apple Of ‘Bait And Switch’ Tactic In Deal That Forced Them Into Bankruptcy

One of the rumored features that didn't make it onto the iPhone 6 is the sapphire display. Touted for its durability and scratch-resistance, sapphire glass is used on the camera lens and Touch ID sensor, but not the main display where it's arguably needed most. It's not there in part because things turned sour between Apple and sapphire display maker GT Advanced, the latter of which accuses the former of a bait-and-switch tactic that ultimately led to a bankruptcy filing.

This boils down to a he-said-she-said tiff, and in an affidavit filed with the United States Bankruptcy Court in New Hampshire by GT Advanced CEO Daniel Squiller, a not-so-pretty picture of Apple is painted when it comes to negotiating contracts. It's a lengthy read, but in short, Squiller says Apple placed all the risk on GT Advanced while ensuring that it stood to gain the most.

Where GT Advanced admittedly tripped itself is by being essentially star struck by Apple. Scoring Apple as a client would be a huge win with lots of potential, or so GT Advanced thought. However, dealing with Apple was anything but rosy, according to the way Squiller describes things.

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Image Source: Flickr (Karlis Dambrans)

According to Squiller, the two sides negotiated for months over price and terms, with Apple demanding a "fundamentally different deal" at the last minute. Instead of buying furnaces from GT Advanced, which it could use to make sapphire crystal displays, Apple offered to instead lend the company money so that GT Advanced could purchase additional furnace components that would be used to grow sapphire for Apple.

"The new structure, as a contract matter, shifted all economic risk to GTAT, because Apple would act as a lender and would have no obligation to purchase any sapphire furnaces, nor did it have any obligation to purchase any sapphire material produced by GTAT. At the same time, Apple constrained GTAT from doing business with any other manufacturer in or supplier to the consumer electronics market, subject to extreme penalties," Squiller said.

Naturally, Apple has a different recollection of events. According to Apple, GTAT is trying to "vilify Apple and portray Apple as a coercive bully," which is both "untrue and harmful to Apple." The Cupertino outfit points out that GTAT "could have walked away from negotiations with Apple" but chose not to because it viewed the opportunity as being "transformative for its business."

"Apple did not trick GTAT into entering into the agreements. The agreements were negotiated by the two companies and their sophisticated counsel. The unfortunate loss of value to the public shareholders was not caused by Apple, but rather GTAT's inability to perform under the agreements," Apple says.

Either way, Apple's right in that it's an unfortunate loss.

Via:  ArsTechnica
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