Court documents appear to show that Apple sank GT Advanced by offering it what would have been its largest sale ever and then changed the terms of the agreement after it was too late for the smaller company to go elsewhere.
In documents unsealed by a US Bankruptcy Court in Springfield, Massachusetts, GT Advanced Chief Operating Officer Daniel Squiller says Apple conducted a bait and switch which brought the company to its knees.
GT Advanced, a maker of sapphire furnaces that supplied sapphire material to Apple for its smartphone screens, filed for Chapter 11 protection but has refused to publicly explain why it had imploded, because of confidentiality clauses which Apple forced it to sign.
All this came to light because Judge Henry Boroff denied requests by the companies to keep some of the documents in the case under seal.
Last year, GT Advanced outfitted a plant owned by Apple in Mesa, Arizona with furnaces that it would use to make scratch-resistant sapphire exclusively for Apple.
“With a classic bait-and-switch strategy, Apple presented GTAT with an onerous and massively one-sided deal in the fall of 2013,” Squiller wrote.
At the start of negotiations, Apple offered to buy 2,600 sapphire growing furnaces from GT Advanced, which GT Advanced would operate on behalf of Apple, the “ultimate technology client to land,” according to Squiller.
“In hindsight, it is unclear whether Apple even intended to purchase any sapphire furnaces from GTAT,” he wrote.
Apple offered a deal, under which it would shift away economic risk by lending GT Advanced the money to build the furnaces and grow the sapphire, and then sell it exclusively to Apple for less than market value, Squiller wrote.
GT Advanced was effectively forced to accept the unfair deal in October 2013 because its intense negotiations with Apple had left it unable to pursue deals with other smartphone makers, he said.
However, Apple called GT Advanced’s accusations “scandalous and defamatory” and said that the statements are intended to vilify Apple and portray “Apple as a coercive bully.”
It said GT Advanced was eager to make a deal, and pointed to a jump of over 20 percent in the shares of GT Advanced after it was unveiled.