back to article 'Apple Watch' sapphire glass maker files for bankruptcy protection

The firm which was rumoured to have been manufacturing sapphire glass for Apple's upcoming smartwatch has filed for bankruptcy protection. Sources had been whispering that Apple was planning to use the scratch-resistant material for the screens on the Apple Watch and forthcoming models of the iPhone. GT Technologies filed for …

Anonymous Coward

Speculation

Was the stuff simply too fragile in large sheets?

Until someone manages to make single crystal sheets 150mm in diameter, it's hard to know what the real world properties are going to be like. There is a big difference between a piece of crystalline alumina 30mm in diameter and fairly thick, and one 150mm diameter (and possibly rather thinner to allow for an effective touchscreen).

An historical example would be the big gap between the development of wrought iron, basically a craft skill, and the open hearth furnace.

One MD I worked for remarked that the person he would most like to have been was the Pilkington - not a family member - who brought about the first Pilkington float glass plant. Because you can't build a prototype - it has to be big enough actually to make float glass, and that means that, just as with a Lunar human-carrying lander, the first prototype is actually the production model. Did Mr. Pilkington sleep at night while the money was being spent and the factory was going up?

It's possible that something like this has happened here - that the sheets just don't have the right properties and it may take years of development to make it happen.

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Holmes

Re: Speculation

Fragile large sheets could be a huge problem if it doesn't bend with the rest of the iPhone 6 Plus properly. Instead of just pulling a bent phone out of your pocket, you could end up with a bent phone and a shattered screen.

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Anonymous Coward

Re: Speculation

Yes, this is what I was thinking. The idea behind Gorilla and Dragontrail glass is that the glass is mostly amorphous so there is no long distance crystal structure. Ion bombardment forces extra atoms into the surface layer and puts it under compression, so when it is bent the outer side does not go into tension, up to a certain amount of bend. Amorphous substances, of course, crack quickly under tension.

This means that a Gorilla glass screen can tolerate the sort of bending you get with a polycarbonate frame.

But corundum - crystalline alumina - cannot be ion bombarded or the surface molecular structure will break up. That means any bend puts it into tension on the outside, and although the molecule bond is stronger than the amorphous bond in glass, it will still crack at relatively low tension.

Did Apple go for metal frames intending that they would be rigid like a watch case and so suitable for use with alumina, only to discover than they were not rigid enough unless unacceptably heavy? Or do big sheets of corundum just suffer enough crystal defects that they are unacceptably crack prone in bulk? Where's the Apple Snowden when we need him?

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Silver badge

Re: Speculation

Al203 works fine if it is a part of a small rigid frame - watch or small phone.

Examples I have owned over the years - Polyot (not the Shturmanskie, one of the later ones) - 25+ years ago and Motorola KRZR. If Al203 is framed or attached into a small rigid structure it is nearly indestructible. The KRZR I had 8 years ago is still alive, kicking and taking daily abuse (and regular drops) from my mom. She has been unable to break it after I handed it down After all this years there is only a single chip on the outer Al2O3 cover on the top of the clamshell :)

I do not see how it can work with a large sheet though. Even an iPhone 1-4 size phone will be too large. A thick enough Al2O3 coat will be unacceptably thick and and heavy. It will probably be too thick for a capacity screen too. IMHO the KRZR was the first and last application of AL2O3 in this area. The likelihood of another one is pretty slim.

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Silver badge

Re: Speculation

if you make almost anything thin enough then it can bend a bit without much drama. The is no reason why the sapphire cannot be made very thin and then bonded to a tougher substrate - in theory . In practice may be very different, though.

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Silver badge

Re: Speculation

I have to think Apple had done some due diligence of the suitability of sapphire for their needs before committing all the money to loan to GT to build the factory, and bought all the furnaces they equipped it with. They will have worked out all the production issues before making an investment of that size, but there are a lot of steps after proving something will work to proving something will work in 150 million devices a year.

I'll bet it was either GT not delivering on their end, or possibly it isn't hard to cut the screens in small numbers but making them by the tens of millions has proven to be problematic so far. Sapphire is very hard, after all, so you pretty much need to use diamond coated tools or lasers to cut it.

Maybe Apple couldn't source enough of those tools in time to produce the screens at a high enough rate to be used in the iPhone 6. That might be where the August rumors of "sapphire will only be for the 6 plus" or "sapphire will only be for the 128GB version" came from, if rumors were based on some truth that Apple was considering whether to try to make due with a severely restricted supply.

I'm imagine it'll probably come out in the bankruptcy hearing, or shareholder suits against GTAT management.

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Anonymous Coward

I have an ORIS watch, sapphire glass, front and back, but to negate the fact the this kind of glass is brittle, the watch glass is rather thick. While in the ten years I have had the watch here is not a mark on the glass the case has picked up a number of battle scars. The watch is also quite heavy. Thin sapphire glass is all well and good and relatively light when thin but it shatters easily.

It's more than likely that Apple didn't use it in the design because it wasn't up to the job.

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Anonymous Coward

Re: Speculation- @Dave126

There is a possible reason why a thin layer of anything hard may not be bonded to a tougher substrate - differential thermal expansion.

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Trollface

Re: Speculation

"Fragile large sheets could be a huge problem if it doesn't bend with the rest of the iPhone 6 Plus properly."

Didn't you hear? The iPhone 6 doesn't bend!

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Anonymous Coward

Re: Speculation

Vertu have been using sapphire screened phones for years, they were the pioneers in creating an assembly plant that could manufacture it and creating supplies around the world. Not on the scale that Apple would need it, but the technical aspects were all solved.

http://www.techradar.com/news/phone-and-communications/mobile-phones/sapphire-screens-for-mobiles-were-branded-impossible-15-years-ago-1251887

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Re: Speculation

It's bloody hard to make quality sapphire in these sorts of quantities, if you look at today's prices the screens would cost well over $100. GT were banking on getting lots of things working all at once - jumping from 90kg "boules" to 180kg. Growing the crystals in the preferred "c" axis so that regular longitudinal slices can be used, like in silicon - rather than having to saw it into planks like a tree. I'm sure they will get there, but not while being kicked all the way down the road. Chapter 11 might do them a lot of good, I hope they make it work because super-quality LED's and plenty of other stuff relies on high quality sapphire substrates.

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Silver badge

Welp,

time to start buying stock in Corning...

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Bend?

It's more scratch resistant than glass. But it will crack, not bend or flex

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Clarification

GT Advanced Technologies based in Merrimack, NH is the entity filing Chapter 11 in the article and is not related to GT Technologies in Westland, MI which makes automotive parts.

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Trollface

Re: Clarification

> GT Technologies in Westland, MI

In an unrelated clarification: Detroit, MI filed for bankruptcy, not be confused with Westland, MI.

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Headmaster

Re: Clarification

But the article has it wrong (at least as I write this - it may get corrected).

The article clearly states:

> GT Technologies filed for Chapter 11 bankruptcy protection

which, as the grandparent points out, is factually wrong. The company that filed for Chapter 11 is "GT Advanced Technologies Inc.".

This sort of detail matters, as getting it wrong can damage the wrong company's stock price.

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It's unlikely that Apple didn't have a viable way to use sapphire if it spent half a billion on volume production. More likely there were problems in achieving volume production that prevented use in iPhone 6, and hence suspended the next prepayment from Apple. It may simply be that the watch has slipped, and GTAT hit a cashflow wall.

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Anonymous Coward

Apple will buy the remains of the company

and safeguard the supply. Pretty sure.

And then they will start to sue all the watchmakers using sapphire glass in their watches.

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bankruptcy

"GT said there is still about $85m of cash in its coffers."

how then can you go bankrupt?

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Anonymous Coward

Re: bankruptcy

Money owed > Money in bank.

Chapter 11 is designed to let companies restructure before they implode into an unrecoverable mess. If you only try it when you have $0 in the bank then you're unlikely to have enough time to recover anything.

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Holmes

Re: bankruptcy

@psychonaut:

" 'GT said there is still about $85m of cash in its coffers.;

how then can you go bankrupt?"

Easy - when you owe a BEELLION.

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Silver badge

Re: bankruptcy

fair enough. is this a US thing or can people do that here?

from comments above i guess its to stop foreclosure of the company before they have a chance to sort it out then? actually sounds reasonable now if so

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Silver badge

Re: bankruptcy

"is this a US thing or can people do that here?"

The UK process of "Administration" is similar, if not exactly the same. The court gives the company protection from its creditors, but in exchange, the company is administered by a court-appointed officer to ensure that the promised restructuring is actually carried out. The US system (like the Irish company law process of "Examinership") operates will less direct supervision from the courts, and allows the company more leeway, but the intent is the same: protection from bankruptcy while the company attempts to restructure.

Unfortunately, most people in the UK think that "gone into administration" is exactly the same thing as "gone into bankruptcy", so it tends to hasten the demise of companies as orders dry up. (cf. the similar failure to understand the difference between "laid off" versus "made redundant").

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Re: bankruptcy

Interestingly they have $1 Billion in assets and liabilities, well how much of which?

One is a good thing, and the other a bad thing....

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Silver badge

Re: bankruptcy

Not really. Once a company goes into administration the administrators will look to get the greatest value for the creditors in the short term (i.e. no 5 year plans here). Once they go into administration it will be a case of selling it off for a fraction of the worth or asset stripping.

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Silver badge

Bless

I have sympathy for GT (advanced) - yet there's a certain feeling of schadenfreude from a petty person like me.

Apple, despite the views of their board, have been unable to control physics (yet)

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Anonymous Coward

Re: Bless

Unfortunately, when God stretched out his hand over the surface of the waters, he was holding it wrong.

Mrs. God pointed it out about 5 seconds later, but by then it was just too much faff to do it all over again.

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Silver badge

Ah

Well this is awkward :/

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Silver badge

Apple loaned them the money to build the big factory in Arizona

The original deal was that Apple would loan GT Advanced the money to build the factory, Apple would buy the furnaces to equip it, and GT Advanced would operate those furnaces and sell the sapphire to Apple. Reportedly at full output it would produce 10x more sapphire than all the rest of the factories in the world combined (sapphire doesn't have a huge market, so it isn't as gigantic as Telsa's battery "gigafactory")

GT had an upcoming $350 million payment on this loan, which they can't pay. The question is, is it true Apple was originally planning on using sapphire in the iPhone 6, or was that a rumor? If they were but changed their mind, was it due to GT not being able to deliver what they promised, or due to Apple not being able to use sapphire in the way they originally planned?

They don't lay blame on Apple (yet) so either it wasn't Apple's fault, or they're avoiding accusing them for now, hoping Apple will cut them a break in bankruptcy since they're the major debt holder. Apple might end up owing this factory in lieu of debt repayment, but if so that really won't change much in the relationship, so long as Apple doesn't blame GT for this. If they do, they could contract someone else with sapphire expertise to operate the factory for them, and GT Advanced would probably not emerge from bankruptcy.

Sucks for all those who get caught up in the GTAT stock hype, they've seen the price drop by 95% in less than a month, but that's why they call it speculation not investment!

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Assets and liabilities?

If they have assets of $1 billion they are laughing, if they have liabilities of $1 billion they are in trouble.

But assets and liabilities of $1 billion surely makes them neutral....

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Bronze badge

Re: Assets and liabilities?

If the asset is a half-built factory that is no use to anyone until it is completed at the cost of another $1bn, and no to anyone else other than that company, and the liability is a $1bn bank loan that is repayable next week, and they are unable to refinance the bank loan and get another loan for the other $1bn to complete the factory, then they have a problem.

Or even if the loan isn't repayable next week, but they don't have enough money to finish the factory and no way to get the money to finish it, they have a problem.

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Anonymous Coward

Re: Assets and liabilities?

Unless your asset is your liability?

Liverpool FC had an asset worth £60 million who was also a liability,

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"However, it also announced assets and liabilities worth upwards of $1bn" Good one Register, that would be potentially the same statement as zero equity then ?

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