The future of Apple’s Mesa facility still is unclear as the U.S. bankruptcy court in Massachusetts agreed on Monday to approve the settlement agreement between the tech giant and its former sapphire glass supplier.
The settlement will allow New Hampshire-based GT Advanced Technologies Inc. and Cupertino, Calif.-based Apple to part ways and will free up more cash to help GT emerge from bankruptcy.
GT filed for Chapter 11 bankruptcy in October, slightly less than a year after signing a $578 million contract with Apple to produce sapphire glass in Mesa and create 700 jobs. Layoffs of those Mesa employees and others at GT’s second facility in Massachusetts were announced shortly after the bankruptcy filing.
GT owes Apple $439 million worth of loans it received for the purpose of ramping up sapphire production in Mesa. To pay down that debt, the settlement gives GT up to four years to sell more than 2,000 furnaces at an estimated $500,000 each, with a portion of the proceeds going to Apple. The furnaces were intended to make iPhone 6 screens out of the sapphire material.
Terms of the settlement also allow GT to stay in the Mesa facility rent free through December next year as it winds down operations and sells the furnaces.
But what happens after GT moves out is a big question mark.
Apple owns the former First Solar plant, a roughly 1.4 million-square-foot facility located at the former GM Proving Grounds near Phoenix-Mesa Gateway Airport. It has stated that it is committed to preserving jobs in Arizona.
“We are proud of the jobs we've helped create in Arizona through Apple’s domestic manufacturing initiative and our state-of-the-art facility powered entirely by renewable energy sources,” the Apple statement said. “We are focused on preserving jobs in Arizona following GT's surprising decision and we will continue to work with state and local officials as we consider our next steps.”
But Arnold Maltz, associate professor in the supply chain management department at Arizona State University’s W.P. Carey School of Business, said he isn’t very optimistic.
“Unless Apple has some idea that they want to put another supplier in there that needs things like clean rooms, then my guess is they’re going to sell it,” Maltz said.
Most of Apple’s suppliers are overseas and Maltz said it’ll depend on whether the tech giant wants to increase its U.S. supply chain.
“Do they want to push more U.S. capabilities? Maybe. But could they find somebody? Maybe,” he said. “It depends on what they want to do with their supply chain. Do they want to have a bigger U.S. footprint as part of the supply chain? If they do, this would be an obvious place to put it.”
If Apple decides to keep the facility, he said the firm would act fast to ramp things up again as soon as GT moves out.
“If they’re going to do something, they will be looking very hard, certainly by the second half of next year, to find somebody to put in there and planning in advance,” Maltz said. “Because one of the problems, I suspect, with the GT situation is that it was so rushed.”
