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Sapphire supplier accuses Apple of bait-and-switch as details go public

Gregg Keizer | Nov. 10, 2014
Apple's former sapphire supplier, GT Advanced Technologies, accused its ex-partner of bait-and-switch tactics during 2013's negotiations, claiming that Apple pressured it into signing contracts by telling it to "Put on your big boy pants," court documents released Friday said.

Even so, GT's management did the deal. "In October 2013, GTAT was out of options because it had invested months negotiating a sales contract with Apple while being effectively locked out of pursuing other opportunities with Apple's competition," said GT.

And Apple didn't let up. "When GTAT's management expressed obvious concerns to Apple regarding the deal terms ..., Apple responded that similar terms are required for other Apple suppliers and that GTAT should, 'Put on your big boy pants and accept the agreement.'"

It's widely known that Apple squeezes its suppliers, using its clout to strike deals that leave those suppliers thin margins. But Squiller's description of the negotiations and the ensuing interjection of Apple into the manufacturing process was the first time details have gone public.

Apple disputed the claims GT made in Squiller's declaration. In another filing (download PDF) released Friday, Apple pointed out that "GTAT could have walked away from negotiations with Apple and refused to enter into the Agreements."

Apple also argued that the deal was not a bait-and-switch and that it was not as one-sided as GT made out. "GTAT was not tricked into entering the agreements," Apple's lawyers said. "The allegation that the deal was 'massively one-sided' is misleading because among [other] things, the transaction did not work out well for either party. Apple spent a significant amount to build the factory, and advanced $439 million to GTAT, and does not have the sapphire for use in its products."

In another filing, Apple claimed it had spent a total of $2 billion on the project, a quarter of that on the Arizona factory.

Apple and GT have agreed to a settlement that would sever most ties between the companies by terminating all contracts. Apple will be allowed to recoup the $439 million it had already given GT as the latter sells its furnaces over the next four years.

The settlement awaits court approval.

 

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