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Case
-
Reference no. CCW160408
Published by:
Columbia CaseWorks, Columbia Business School (2016)
Version:
May 9, 2016
Length:
17 pages
Data source:
Published sources
Abstract:
In October 2013 GT Advanced Technology entered into an agreement in which GTAT agreed to supply industrial-sapphire material to Apple; the material was to be used to improve the quality of iPhone screens. This was a new venture for GTAT, since prior to this deal, GTAT had been a leading supplier of the equipment that was used to create industrial-sapphire, not a producer of the material itself. Apple helped to finance the scaling up of GTAT’s industrial-sapphire manufacturing facilities by providing GTAT with a prepayment that was secured by an equipment lien; however, Apple had no obligation to purchase any of GTAT’s industrial-sapphire output. In September 2014 Apple announced that its production plans had changed and its new iPhone would not have a sapphire crystal screen. Soon thereafter, GTAT filed for bankruptcy. This case asks students to consider why GTAT took on the terms of such a risky deal, how their risk might have been mitigated, and what options were open to both GTAT and Apple in the aftermath of the deal.
Learning objectives:
1. How did GT Advanced Technology’s deal with Apple to produce industrial sapphire for the screens on its phones lead to GTAT’s bankruptcy?.
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Ref no: CCW160408