Apple Inc. (NASDAQ:AAPL)’s Sapphire glass supplier GT Advanced Technologies Inc (NASDAQ:GTAT) has filed a chapter 11 bankruptcy on Monday, which has shocked the investors and the street. Many concluded that the reason behind bankruptcy of GTAT might be the Apple’s exclusion of Sapphire display for iPhone 6 and 6 plus. Jo Ling Kent of Fox Business News explained the reasons behind GTAT’s bankruptcy on Fox Business.
“There were reports before that iPhone 6 was going to have Sapphire glass and now that is no longer the case. The reason this company is going bankrupt is because they have actually built a factory in Arizona, but the timing of the factory plus the fact that the iPhone 6 is not using sapphire glass is resulting in this very difficult situation for GT Advanced Technologies,” Kent explained.
Following the bankruptcy filing by GT Advanced Technologies Inc (NASDAQ:GTAT), its stock took a nose dive and dropped by around 90%. The stock price has dropped below $1 per share. This invoked huge loss for shareholders and investors.
Apple Inc. (NASDAQ:AAPL) has invested around $578 million in GT Advanced Technologies Inc (NASDAQ:GTAT) for setting up a facility in Arizona. The plan was for GTAT to repay the loan to Apple through sapphire glass supply for iPhones and Apple Watch. But the exclusion of sapphire display for iPhone 6 and 6 plus came as a shocker for GTAT, which can only replay the loan through sapphire supply for Apple Watch.
Kent said that the reason behind Apple Inc. (NASDAQ:AAPL)’s exclusion of sapphire display for iPhone 6 and 6 plus might be either due to the fact that the Arizona factory’s inability to supply the glasses in time or Apple Inc. (NASDAQ:AAPL)’s decision to use their own reinforced glass for iPhone. But she added that two out of three Apple Watch model might still use sapphire display. She mentioned that GTAT will still hope to utilize that opportunity.
Kent said that GTAT is bankrupt for now, and with proper restructuring and partnership they could bounce back. She added that this is opportunity for another company to come in. With the hope around Apple Inc. (NASDAQ:AAPL) Watch using Sapphire glass, some people might take the risk of buying the GTAT stock at less than $1 per share and look for the gain in future.
As of 30 June 2014, Carl Icahn‘s Icahn Capital Lp hold around 52.8 million Apple Inc. (NASDAQ:AAPL) shares.