GT Advanced Asks for Court Permission to “Wind Down” Sapphire Plant

Apple’s sapphire crystal supplier GT Advanced may exit the sapphire manufacturing business, as it has asked the court for permission to “wind down” operations at its manufacturing plants in Mesa, Arizona, and Salem, Massachusetts (via the Wall Street Journal).

The distressed company called its agreement with Apple to mass-produce sapphire glass for iPhones “oppressive and burdensome,” the bankruptcy filings reveal. The only way to stop the “bleeding” is to terminate the deals, GT Advanced says.

“The cash burn at GTAT’s sapphire manufacturing operations for the benefit of Apple is not sustainable,” the company said in court papers. “The relief requested in the wind-down motion is necessitated by GTAT’s liquidity crisis and the substantial daily cash burn of in excess of $1 million with respect to such operations.”

The exit would cost 890 people their jobs (via WSJ); although GT Advanced regrets the potential loss, this is the best way to “stop its mounting losses,” representatives of the company said. However, the move will include incentive bonuses totalling up to $64,700 for some 13 employees who will help the company wind down the facility.

Representatives of both Apple and GT Advanced held discussions with Judge Henry Boroff on Thursday as they fought to keep their agreement private, and the judge granted their request.

None of the companies commented on the proceedings. Apple, however, reiterated its Wednesday statement: “We are focused on preserving jobs in Arizona following GT’s surprising decision, and we will continue to work with state and local officials as we consider our next steps.”

The tech world was shocked on Monday when GT Advanced announced that it was filing for Chapter 11 Bankruptcy to protect its business from creditors. Supply for the Apple Watch isn’t likely to be affected, sources say, but those sources weren’t as sure about supply for the iPhone.