GT Advanced Technologies announced today that it had declared Chapter 11 bankruptcy. The company has been in the news because it has a contract to supply sapphire to Apple, and we’ve been following some of the company’s next-generation sapphire technology (see “Cheap, Scratch-Resistant Displays”).
Investors had been hoping that the sapphire would be used for Apple’s iPhone 6, which would have meant a big rush of revenue this year for GT. But instead, it seems that the sapphire is intended for the Apple Watch, which isn’t coming out until next year some time, and no one knows how well it will sell.
We’ve followed GT because it developed a novel technology for making large, ultrathin sapphire sheets—big enough for smartphones and tablets. You would just laminate the sheet to a piece of glass, giving you the scratch resistance of sapphire at low cost.
It’s not clear yet how the bankruptcy will affect the development and roll-out of the new technology. The company says the filing does not mean that it is going out of business. It’s low on cash—down to $85 million as of September 29. It plans to take advantage of provisions of bankruptcy law to raise money to keep operating, as GM did in 2009. It’s common for companies to continue operating under bankruptcy.
GT may just need a little help to survive until more proceeds start rolling in from Apple. But of course, no one knows how well the Apple Watches will sell.
GT’s fate may also be tied to the solar industry. GT supplies furnaces for making the crystalline silicon used in solar cells. In the last few years, the company has faced hard times as the solar industry stopped building factories and buying GT’s equipment. Analysts believe the solar industry will start building again in the next year or two, but no one knows if it will buy furnaces from GT, or go with different suppliers.