Secret Apple's reasons for failure sapphire screen program

Originally expected to provide super-hard for Apple iPhone 6 sapphire panel supplier GT Advanced Technologies, Inc. (hereinafter referred to as GT), its chief executive officer in the Pacific time early October 6th 7:00 am, and call an Apple vice president, said the GT filed for bankruptcy protection in the 20 minutes before.

According to Apple's claims of creditors of the GT, Apple to ease the financial strain GT problem has been going to some concessions on both sides of the contract. The next day the two sides plan to restore executives at Apple headquarters for talks. Therefore, GT announced the news of Apple's bankruptcy down by surprise.

Apple, with its strict management of the global supply chain has become the world's most valuable company. Since its advent in 2007 of the first-generation iPhone, Apple through its suppliers continue to compress the cost and time, instead of promoting these suppliers reached a nearly impossible goal. However, Apple's cooperation with the GT eventually abortion, which is considered a major misstep Apple.

GT bankruptcy highlights Apple's suppliers as prospects and risks. Apple's orders to create a multibillion-dollar revenue, but at the same time it also means that adaptation in meager profits huge fluctuations in demand, not a little mishap. "It's not easy to earn money." Apple has a long-term supplier in Asia said.

Apple's history of cooperation with the GT

iPhone has always been there screen scratches and cracking problems, Apple plans to use sapphire precisely in order to find a solution. Sapphire is one of the hardest material in the world, now is usually synthesized in the calcination temperature of 2000 degrees oven. Meanwhile, the sapphire is expensive - glass is more than five times.

Only the iPhone's camera and fingerprint reader replaced sapphire products, Apple would consume a quarter of global production of sapphire. Early last year, Apple began to find more suppliers, in order to be able to use on the iPhone screen sapphire. The difficulties encountered in this process, Apple had contact with other companies outside of GT, one of the company's executives said, given the price of an apple, the production of sapphire simply to make money.

GT's in New Hampshire, homemade sapphire furnace production. According to Apple's claims of creditors of view of GT, GT inform Apple last March, they are developing a new furnace can produce 262 kg of sapphire ingots (cylindrical crystal ingot), was more than twice the maximum ingot. This large ingot can be cut more panels, but also reduce costs.

Secret Apple sapphire screen program failed Cause 1

A few days, GT has signed an agreement with Apple last October 31, on the GT produced the first batch of 262 kg sapphire ingot after. According to Apple executives describe the people around him, then covered the first ingot cracks, all unusable. They also said that the quality of GT's sapphire necessarily rhetoric has increased, it has successfully developed a larger furnace performance but also to Apple's encouraged.

GT is mentioned in the bankruptcy filing, Apple intends to acquire its newly developed 2600 furnace. However, Apple is not willing to pay an extra 40% of the profits in the acquisition of the furnace, when a person closely with senior GT Road.

Apple worked GT provides a $ 578 million loan, so that the 2036 GT manufacturing units furnace, and the establishment of the factory in Mesa, Arizona, expects its sapphire production can reach more than 30 times when the world's largest plant. Apple plans to buy the plant, and then spent $ 500 million to renovate rebuilt last year to $ 100 leased GT's. GT is very interested in this, as compared with the supply of equipment, this cooperation GT project will bring more steady income. Moreover, when the production of solar cells GT equipment business has been in trouble, the business profit in 2013 decreased by 66% over two years ago.

Earlier this year, Apple's turn to make GT began producing sapphire. GT for the expansion of the company in a short time recruited 700 employees. A former manager, some aspects of the recruitment process is too hasty, so that when the end of March this year, there are more than 100 new recruits who do not know the story should go. Two former employees said, adding that the company has not even time and attendance system, leading to a lot of people long-term sick leave.

The beginning of time, GT manager of the company also approved unlimited overtime for employees to fill the furnace raw material for mass production of sapphire. Another two former employees described, GT had not yet create enough furnaces, so many employees with nothing to do.

"We were just back and forth sweeping the ground," a former top employee GT says, "It feels like we sweep the money out the door."

Facts have proved that the production process is the biggest difference between the sapphire storm. Piece ingot production had almost spent 30 days time, cost about $ 20,000. Moreover, according to the people around Apple executives said that such ingot produced more than half are unusable.

GT closely with senior people said, GT will scrap ingots neatly stored in Mesa factory, also allows employees to "ingot cemetery" where the defective products labeled.

Secret Apple's reasons for the failure of two sapphire screen program

Apple and GT mutual shirk responsibility

GT COO Daniel Squiller in bankruptcy court that Apple has put his company into a "captive" suppliers, "bear all the risks and all the costs." GT is not possible when the price of Apple decided to make money, he said.

A GT's creditors revealed that Apple is due to the failure of the GT GT the company's own management problems, and this argument is also used by Apple's consent on the Wall Street Journal. "We have always been committed to making the project successful, never wavered."

Squiller said, because power outages and delays in the construction of the production line, GT company lost a total output of three months, Apple GT production line and a power supply problem should be responsible for it. However, according to Apple's point of view on the GT version of creditors, GT bankruptcy should be attributed to "mismanagement" and not a power interruption.

"Apple's remarks were deliberately mislead public opinion, absolutely not true." GT brief statement in an interview, "We do not need to discuss all the problems one by one."

By the end of April this year, Apple should have lent $ 578 million GT of loans detained last 139 million, saying it was because GT did not reach the yield and quality requirements of the contract.

The GT that Apple changing the specifications of sapphire in the bankruptcy filing requirements. Said, GT in order to build and operate the plant total cost of $ 900 million - more than twice the $ 439 million loan provided by Apple.

GT suddenly declared bankrupt

Allegedly, this year's June 6, GT CEO Thomas Gutierrez, vice president and two of Apple's headquarters in Cupertino, Apple met on product issues were explained. He provided a document, "what is the problem," named, lists a total of 17 issues, including improper maintenance of furnaces, furnace specifications negligence is not uniform and so on. Gutierrez said he had to take responsibility for the company's losses. After meeting with Apple executives, in order to meet the requirements of sapphire, GT decided to stop production of 262 kg ingots, and instead of producing 165 kg.

After the ingot quality standards, GT will use a diamond saw to cut into 35 cm thick ingot ingot, it's just the shape of the upper and lower surfaces of two new Apple iPhone: iPhone 6 and iPhone 6 plus. This ingot is then cut through the layers to, it can be used to make screens.

However, GT problem is not limited to the production process. According to a former employee, said in August this year, GT 500 had to be packing and shipping of sapphire ingot lost, a few hours later, those employees that a manager will be recycled back to the ingot. If not in time to get back to the ingot, this failure will make GT suffered hundreds of thousands of dollars in losses.

To the moment when Apple is expected the new iPhone on September 19 sale will not be used sapphire screen almost become finalized. However, according to informed sources, Apple is still hoping to get as much of sapphire products. According to Apple's statement, the number of products to produce only 10% of GT prior commitments.

GT closely with senior people that Apple sapphire quality requirements change frequently, sometimes even a few days ago to accept the return of the ingot.

They also said that the first week of September, GT inform Apple said the company in a serious cash flow problems. GT asked Apple to provide the last part of the $ 139 million loan, and to increase the purchase price of sapphire from 2015 onwards.

Apple revealed who, October 1 GT Apple intends to provide $ 100 million in loans and extend its repayment. Apple is willing to play instantly raise the price of sapphire, and consider in 2015 to further improve the price. Meanwhile, Apple also consider relaxing the exclusive sales, making the GT furnace can be sold to other customers. The parties intend on this series on October 7 matters discussed in detail at Apple headquarters.

After this is October 6 through the phone that morning, GT Gutierrez told Apple CEO, his company has filed for bankruptcy protection. Apple reportedly Gutierrez fear obstruct, before going to mention this.

After this announcement, GT's stock plunged 93%, $ 1.4 billion market value evaporated. Source: Wall Street Journal


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