Apple Watch Sapphire Supplier Declares Bankruptcy

There’s high financial drama unfolding on the Apple Watch supply chain, and the way this story plays out will go a long way towards answering some of the big, nagging questions about the device, like its eventual price range and release date.

GT Advanced Technologies (GTAT) has announced that it is filing for Chapter 11 bankruptcy. GTAT is the primary supplier of Sapphire Glass to Apple, and they run an Arizona-based facility dedicated to Sapphire glass specifically made for Apple products.

The iPhone 6 and 6 Plus were originally rumored to use Sapphire glass, but were eventually fitted with “ion strengthened” glass instead. However, the Apple Watch was deeply committed to using the much harder, scratch-resistant Sapphire material. So if GTAT is going bankrupt, it must be very bad news for the Apple Watch, right?

Not so fast, my friend.

It looks like there’s some high-level maneuvering taking place. GTAT President and CEO Tom Gutierrez was quoted saying that the bankruptcy 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.”

Apple Watch timekeepingSo, it seems GTAT’s ability to provide Sapphire glass will remain unchanged for the time being. The company is claiming it needs more time in order to resolve some of its debts, including a $578 million repayment for Apple’s investment in the Arizona facility.

There’s no reason why Apple should be concerned about getting repaid. As Nathaniel Arnold of Wall St. Cheat Sheet pointed out, if GTAT is unable to repay Apple, then Apple retains the right to acquire control and possession of its facilities. In other words, Apple may acquire its own Sapphire glass manufacturing plant, maybe even at a cut-rate bankruptcy price.

This would surely reduce the production cost of Sapphire glass, which would bring down the retail price of the Apple Watch. In light of the complaints about the anticipated retail price, it stands to reason that Apple is still working on all possible ways to bring that price down.

About The Author

Rich Karfilis

Rich Karfilis is a tech writer and gadget freak, and his work can also be found at http://technewstoday.ca/ and at http://www.robotaton.com/blog.