GTAT unexpectedly filed for bankruptcy protection on the 6th. GTAT's stock price plummeted that day, from US$11.05 on the previous trading day to US$0.8, a drop of more than 92%, and its market value evaporated by US$1.4 billion in one day. In the following few trading days, the stock showed significant fluctuations. GTAT's stock price rebounded sharply by more than 50% on the 7th, fell by 9% on the 8th, rose by more than 17% on the 9th, and fell sharply by more than 37% to US$0.81 on the 10th.
Apply for closure of sapphire manufacturing plant
On the 9th, GTAT held a closed judicial hearing in the bankruptcy court, but did not disclose a word about the "reasons for bankruptcy and reorganization plan" to the outside world. GTAT stated that this was mainly due to the confidentiality agreement signed with Apple, which prevented it from disclosing relevant details. If the confidentiality agreement is violated, GTAT may face compensation of US$50 million. On that day, the court announced that it would make a final decision on relevant matters on October 21.
On the 10th, GTAT submitted another document stating that the supply contract with Apple has brought huge "pressure and burden" to it, so terminating the contract will be the only way to prevent the company's operating conditions from continuing to deteriorate. GTAT requested court permission to close its sapphire manufacturing plant in Arizona and lay off 890 employees.
The lawyer representing GTAT said that the operation of the sapphire manufacturing plant consumes a lot of money, but the return on this investment from Apple is very small and it is difficult to maintain. While it is "regrettable" that the closure of the plant will cause potential job losses, closing the plant completely before the end of the year will "go a long way" in stopping GTAT's losses.
Cooperation with Apple officially breaks down
GTAT also hopes to obtain court approval to make further claims against Apple in the future. "GTAT believes that given the breakdown of the company's partnership with Apple, there will be many claims against the latter in the future."
According to the agreement reached with Apple in November last year, GTAT will provide Apple with "low-cost, high-volume sapphire material manufacturing services," and Apple will pay it $578 million in advance for related expenses. The final tranche of the payment, $139 million, was expected to be paid by Apple this month.
Previously, GTAT predicted that its revenue in 2014 would reach US$600-800 million, 80% of which would come from the sapphire business. This means that the sapphire business will bring the company revenue of 480 million to 640 million US dollars in 2014, an increase of almost 20 times compared with 2013.
Since Apple CEO Tim Cook hinted at the end of last year that its partners would mass-produce sapphire glass, the market was convinced that the era of sapphire consumer electronics had begun, and sapphire concept stocks set off a wave of speculation. As the leader in this sector, GTAT's stock price rose as high as 188% in 2013, and as of early July, the stock price in 2014 once exceeded 120%.
However, the latest iPhone 6 released by Apple last month did not use a sapphire screen as expected. Subsequent market rumors claimed that GTAT and the Apple team were too optimistic when evaluating sapphire as a screen cover for Apple mobile phones. The cost of sapphire is too expensive, the hardness is "lack of elasticity", and the existing cutting technology is not suitable for cutting larger-sized panels.
The sapphire faucet may change hands
Sapphire has excellent optical properties, mechanical properties and chemical stability. Its unique structure, excellent mechanical properties and good thermal properties make sapphire crystal the most ideal substrate material for LEDs, large-scale integrated circuits, etc. Its high hardness and erosion resistance are even more praised by the manufacturing industry. Data shows that if calculated in terms of dimensional hardness, sapphire is about three times the Corning "Gorilla" glass currently used in Apple mobile phone cover glass.
Apple’s products launched in recent years have a special preference for sapphire materials. In 2012, Apple was the first to use sapphire cover as the camera in the iPhone 5 mobile phone launched; in the subsequent iPhone 5S mobile phone, the home button also used sapphire material. Analysts believe that in the long run, Apple will still have a positive attitude towards sapphire applications and does not rule out the possibility of acquiring some core technologies of GTAT.
At the same time, Rubicon Technology, another company in the US Sapphire sector, has been experiencing frequent changes recently. On the day GTAT filed for bankruptcy protection on October 6, Rubicon Technology plunged nearly 12% to $4. However, the stock price continued to rise in the following few trading days, closing at $4.82 on the 10th. It is worth noting that on the 10th, Rubicon Technology’s share price once rose sharply to nearly $6, and the trading volume that day was 6 times that of the previous trading day. Market participants said that after the collapse of GTAT, investors are looking forward to Rubicon Technology becoming the new leader in the sapphire sector and cooperating with Apple. Rubicon Technology has previously stated that it has the ability to produce rectangular sapphire covers that "can be cut into smartphone and smart watch screens."
Analysts also pointed out that in addition to Rubicon, other sapphire manufacturing companies are also expected to benefit from the "GTAT collapse" incident. Some of these companies are unlisted, and listed companies include South Korea's Sapphire Technology, France's Saint-Gobain, and Russia's Monocrystal.
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