Abstract On October 6, GT Advanced Technologies (GTAT), a star company that supplies Apple, filed for bankruptcy protection. On the same day, GTAT's share price plunged from $11.05 in the previous trading day to $0.8, which fell...
On October 6, GT Advanced Technologies (GTAT), a star company that supplies Apple, filed for bankruptcy protection. On the same day, GTAT's share price plunged from $11.05 in the previous trading day to $0.80, a drop of 92.76%, and the market value evaporated by $1.4 billion a day. The bankruptcy of GTAT has also caused GTAT's many equipment contract scandals in China to be unveiled again. Many sapphire industry insiders told 21st Century Business Reporter that GTAT had serious problems in many orders in China, and none of its promised technical indicators could meet the contract standards. For this reason, a large number of Chinese companies have received more than one billion. Economic losses.
However, all Chinese companies remain silent about this choice.
GTAT filed for bankruptcy protection
The surge in GTAT's share price began with its signing with Apple. In 2013, Apple said it will invest $700 million to build the world's largest artificial sapphire factory, partnered with GTAT. The contract period starts in 2015 and lasts for 5 years. The contract shows that GTAT cannot supply the screen supplied to Apple to other companies; if GTAT does not meet Apple's quality and capacity requirements, it will not receive all the money. And the contract also mentioned that Apple is not obligated to buy screens from GTAT.
According to public information, GTAT's main business is to provide advanced materials and crystal growth equipment, including polysilicon, photovoltaic, power electronics, solar component metallization, sapphire production solutions and heat treatment systems.
However, in September of this year, when Apple released its iPhone6 ​​phone, it did not have a sapphire screen, but still used a glass screen. Apple only announced that two of its three smart watches will be equipped with sapphire screens. According to people familiar with the matter, Apple decided not to use the sapphire screen as a mobile phone screen. Therefore, the previous test showed that the artificial sapphire is fragile. When the mobile phone falls from different heights and angles, the screen will be broken.
It is for this reason that Apple did not pay 139 million dollars to GTAT, which gave a GTAT critical strike that was originally in financial trouble. The $139 million sum should have been the last of a total of $576 million that Apple paid to GTAT four times. GTAT said in August that it expects to receive the final payment at the end of October, provided that its Mesa plant in Arizona can meet certain business objectives.
GTAT documents show that as of September 29, the company had cash of about $85 million and the company is seeking bankruptcy protection financing. The company expects that the court will approve its business as usual during the restructuring process.
In an application filed with the US New Hampshire State Bankruptcy Court, GTAT and its subsidiaries reported $1.5 billion in assets and a total of approximately $1.3 billion in liabilities. Its documents show that Apple is one of the hundreds of creditors of GTAT.
Chinese companies are cheated
In fact, many industry insiders engaged in the sapphire industry in the country told 21st Century Business Herald that GTAT has played a role as a “cheater†in selling equipment in China, which sold a large number of sapphire production at high prices in China. Equipment, but almost all of these equipment can't achieve the promised effect.
"At present, most of the emerging enterprises in mainland China that have entered the sapphire crystal growth industry are holding the impetuous psychology of making short-term money. These enterprises do not have their own talents, technology and equipment, so they hope to produce quickly through the introduction of foreign automation equipment. Leading to the success of GTAT." An industry insider told reporters.
He cited the list of companies that have purchased GTAT sapphire equipment, including Jiangsu Jixing, Guangdong Saiyu, Haining Shangcheng Technology, Guizhou Haotian and Jiangsu Linyang.
At the end of April 2011, Guiyang Industrial Investment (Group) Co., Ltd. (hereinafter referred to as “Guiyang Gongtouâ€) and GTAT signed a strategic cooperation agreement for sapphire production in Guiyang. According to the agreement, Guiyang Haotian Optoelectronics Technology Co., Ltd., a wholly-owned subsidiary of Guiyang Industrial Investment Co., Ltd., invested US$218.8 million to purchase 360 ​​sets of GT sapphire production equipment, and will form a phase of annual production of 30 million sapphire substrate materials for two years. Sales will reach about 4 billion yuan.
According to the information, Guizhou Haotian cooperates with GTAT in the United States. It is not a general equipment purchase, but is introduced, digested and absorbed. In addition to providing equipment, GTAT also supports its technology and market.
However, the above-mentioned insiders told the 21st Century Business Herald that Guizhou Haotian was the first to develop a sapphire material project with domestic companies. The initial investment was about 3-4 billion yuan. The content is a 2, 4, 6 inch solution for sapphire. . Subsequently, GTAT intervened in the project, and Guizhou Haotian increased the investment amount from more than 300 million to more than 2 billion, and the number of purchases was astonishing, reaching 360 units, which is equivalent to buying GTAT's entire production capacity for one year. The original intention of Guizhou Haotian, "is to prevent other competitors from intervening in the industry."
Subsequently, Guizhou Haotian paid 20% of the total order price (equivalent to more than RMB 6 billion) to GTAT, but only got more than 20 devices from each other.
"At present, the equipment that GTAT has delivered to Guizhou Haotian is about 150 units, and the annual sales amount is 30 million to 40 million yuan. This is far from the original goal." The above-mentioned insiders told reporters. He also said that the current production cost of Guizhou Haotian, with 2 inches of products as an example, can be about 8-9 dollars / piece, but the current price is only 3 dollars / piece, sales can not even cover the depreciation.
"The reason is that the data provided by GTAT when selling the stove is laboratory data. It has no experience in mass production at all, and many Chinese companies are superstitious American manufacturers, so they are deceived." Added to the reporter.
Behind the silence
This situation is not unique to Guizhou Haotian, but is very common. After cooperating with Guizhou Haotian, GTAT announced the expansion of sapphire equipment and sold 800 sets of equipment to Guangdong Saiyu. Haining Shangcheng Technology Co., Ltd. also invested RMB 500 million in Zhejiang Haining Economic Development Zone to introduce GTAT new generation sapphire. The growth system will build a sapphire substrate production line with an annual output of 6 million pieces. After these projects were completed, they did not meet the cost and production requirements promised by GTAT.
Another industry insider told the 21st Century Business Herald reporter that in fact many domestic projects investing in the LED sapphire substrate industry are very exaggerated, far from the amount originally planned, and the operating rate of most projects is less than 1/3. Moreover, many LED sapphire companies are currently conducting exploratory experiments. Although the number of single contracts is more than 100, the number of first-phase introductions is generally between 5-30.
GTAT not only sells equipment to companies in mainland China, but also sells to Taiwanese customers across the Taiwan Straits. Taiwan enterprise Xinjing Diamond is also one of GTAT's customers. When it found that the GTAT equipment failed to meet the contract requirements, it sue GTAT to court. Finally, GTAT lost the case and needed to return the amount of equipment of Xinjing Diamond for 24 million US dollars.
However, unlike Taiwanese companies, most mainland companies have chosen silence after discovering problems.
The above-mentioned insiders revealed to reporters in the 21st century that the reason why mainland enterprises have no choice but to GTAT to court, "one of the important reasons may be that many of the project investment uses government funds, once the details are disclosed, the government The investment may be frustrated, so many companies choose to remain silent."
In addition, GTAT signed a contract with a Chinese manufacturer through its company established in Hong Kong, not the parent company of GTAT. This means that if a Chinese company sues the Hong Kong company, it can choose to go bankrupt, but it has no impact on its parent company.
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