Apple’s sapphire supplier GT Advanced Tech (GTAT) has released a statement announcing that it is filing for bankruptcy under Chapter 11.
Filing for Chapter 11 means the company will be able to continue normal operations until it can resolve issues with creditors. As of September 28th, GTAT had us$85 million in cash.
What implications does this has on Apple’s upcoming Watch wearable, which uses a sapphire screen cover for both Apple Watch and Apple Watch Edition models, is currently unclear. Apple also uses sapphire from GTAT in its iPhone lineup, for the camera cover and the Touch ID sensor.
The company will begin a reorganization plan to try and resolve the balance sheet issues. CEO of GT Advanced said, in a statement, that the underlying business model is sound.
“GT has a strong and fundamentally sound underlying business,” said Tom Gutierrez, president and chief executive officer of GT. “Today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.
“We are convinced that the rehabilitative process of chapter 11 is the best way to reorganize, protect our company and provide a path to our future success. We remain committed to our roots in innovation and our diversification strategy. We plan to continue to operate as a technology leader across our core set of businesses.”
Many had expected sapphire to be apart of the iPhone 6, but this did not materialize apparently due to low yields of the material.
Details on underlying arrangements are private, but there is a possibility that Apple’s decision not to use sapphire in the new iPhones was one of the factors that caused the company to file for bankruptcy.
Some investors were expecting GTAT to announce debt refinancing plans, but not to the extent of complete insolvency.