GT Advanced inks deal with Apple to stop sapphire materials production

By Caroline Salls

Pittsburgh, Oct. 23 – GT Advanced Technologies Inc. and Apple Inc. reached a settlement agreement under which GT will wind down its sapphire materials production in the company's Mesa, Ariz., and Salem, Mass., locations, according to a GT news release.

The company said it will exit from the market as a producer of sapphire materials and will refocus its business as an equipment supplier, manufacturing and developing sapphire growth systems and processes.

Settlement terms

Under the settlement, which is subject to bankruptcy court approval, 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.

According to the release, Apple will have 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 technology sales.

GT said the agreement also provides for a mutual release of any and all claims by both parties.

As a result of the agreement, GT said it will retain control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion, without restrictions.

In addition, GT and Apple will continue their technical exchange involving the development of processes for growing next generation sapphire boules as GT continues to build on its ASF115Kg technology and expand its range.

“We have been working diligently to develop a restructuring plan that will allow us to emerge from Chapter 11 as quickly as possible and with the operating flexibility and resources to position GT for long-term success,” GT president and chief executive officer Tom Gutierrez said in the release.

“This agreement with Apple is an important step in that direction as it will allow us to monetize our advanced sapphire growth and fabrication technologies in an unrestricted manner.

“In addition to continuing to sell our industry leading sapphire equipment, we remain committed to advancing our Merlin, Hyperion and next-generation PV and polysilicon solar solutions.”

Workforce reduction

As a result of the decision to wind down its sapphire materials operations, GT said it initiated the process of shutting down the Mesa facility earlier this week, and about 650 Mesa employees have been laid off. A group of Mesa employees will remain on board to help with the wind down of the facility over the coming months.

The company said it expects that there will be additional reductions in force implemented in the coming days, which will affect its Salem, Mass., Merrimack, N.H., and select Asia locations.

GT said it will file its motion seeking bankruptcy court approval of the settlement agreement on Monday, and a hearing is scheduled for Nov. 25.

Merrimack, N.H.-based GT Advanced Technologies is a provider of equipment and services that support the growth of the solar and LED industries. The company filed for bankruptcy on Oct. 6 in the U.S. Bankruptcy Court for the District of New Hampshire under Chapter 11 case number 14-11916.

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