Apple’s sapphire glass supplier files for bankruptcy

When Apple opened its own sapphire glass factory in Arizona, it partnered with GT Advanced Technologies to help speed up production. Now the company has filled for bankruptcy under chapter 11, though the decision shouldn’t have any affect on day-to-day operations. It’s unclear exactly why GT Advanced Technologies is filing for bankruptcy, though the company could come out even stronger after it restructures and trims some fat. The sapphire-maker previously signed a contract with Apple worth $578 million, and is set to supply the displays for a good chunk of Apple Watch models when they launch early next year.

Apple Inc. last year said it would invest $700 million to build the world’s biggest artificial-sapphire factory. On Monday, the company running that factory— GT Advanced Technologies Inc.—filed for bankruptcy protection. The bankruptcy filing comes less than a month after Apple unveiled new iPhones with glass screens, rather than sapphire. Apple’s decision not to use sapphire followed tests in which the synthetic sapphire proved brittle, cracking when phones were dropped from various heights and angles, according to people familiar with the matter. The final straw for GT appears to be Apple withholding a $139 million payment, according to people familiar with the matter. That was to be the last of four prepayments from Apple to GT totaling $578 million. In August, GT had said that it expected the last payment to arrive by the end of October—contingent on meeting certain operational targets at the plant in Mesa, Ariz. GT shares collapsed 93% Monday following the surprise bankruptcy filing, wiping out roughly $1.4 billion in market value.