Apple reportedly withheld payments from sapphire glass manufacturer

New details have emerged about the surprise bankruptcy protection filing of GT Advanced Technologies, a.k.a. the company that was supplying Apple with its sapphire. As per the Wall Street Journal, Apple agreed to lend GT Advanced a total of $578 million to help get its large sapphire factory in Arizona up and running, only for Cupertino to withhold the final $139 million payment it was due to make, for reasons which aren’t yet clear, but likely relate to the company’s failure to deliver sapphire to Apple’s satisfaction.

The rapid meltdown of GT Advanced Technologies remains shrouded in mystery. One thing is clear: it is a stark example of what can happen when expectations for a company get out of control and are based on potential gains from a single partner. GT’s Monday filing for bankruptcy protection seemed to surprise everyone. Even analysts who were bearish on the maker of sapphire material due to concerns about cash flow figured the company would be able to raise more capital. But things deteriorated quickly, as the company seemed to burn though about $248 million in cash in a single quarter. That may have led to the company’s filing, since its cash, at $85 million, was below a $125 million trigger point that would allow Apple to demand repayment of about $440 million in loans it had advanced. Apple had agreed to lend GT a total of $578 million to help get a large sapphire factory in Arizona up and running. The tech giant reportedly withheld the last $139 million payment it was due to make, although it isn’t clear why.