San Francisco: GT Advanced Technologies Inc said it will cut 890 jobs, close an Arizona plant expected to make scratch-resistant screens for Apple Inc, and suggested it could pursue legal claims against the iPhone maker while revamping under bankruptcy.
“Only if GT winds down these operations will it be able to stop its mounting losses and re-focus its resources on the operation of its core business of selling sapphire furnaces and other products,” the company said.
GT Advanced said it was burning through $1m a day at the operations it intended to close. “GT believes that it has many claims against Apple arising out of its business relationship with Apple,” the company said in a filing with the US Bankruptcy Court in Manchester, New Hampshire.
Apple responded by pointing to its earlier statement that it remains committed to preserving jobs in Arizona and was consulting with state and local officials on its next steps.
Shares of Rubicon Technology Inc, a rival maker of sapphire material, surged about 23 percent to $4.93 on Nasdaq. Srini Sundararajan of Summit Research said Rubicon’s rally was “an over-reaction to GTAT shutting down.”
GT Advanced filed for Chapter 11 bankruptcy with little warning tomorrow, sending its shares plummeting 90 percent to below $1. The company has provided only scant details of the cause of its bankruptcy and turnaround plans. GT Advanced reached an agreement with Apple last year to transform itself from a supplier of sapphire furnaces to a manufacturer of sapphire for Apple. The iPad maker provided $578m in funding for the Arizona plant, and GT Advanced agreed to repay the money over five years, starting in 2015.
The first sign of trouble came in September when Apple indicated its iPhone 6 would use rival Gorilla Glass instead of sapphire material. GT Advanced asked the bankruptcy court to end 13 contracts with Apple, including a confidentiality agreement that has forced the bankruptcy to be conducted with unusual secrecy. Reuters
