Pulling its “bait and switch” move, tech giant Apple Inc has imposed force upon GT Advanced Technologies into a money-losing deal in order to supply the smartphone maker with sapphire, an affidavit filed by a senior executive of the company has revealed.
The documents were unfolded by a US Bankruptcy Court in Springfield, Massachusetts, on Friday.
In the document, Daniel Squiller, GT Advanced Chief Operating Officer, said that the tech giant offered it with an impressive deal.
As per the document, Apple offered the largest sale ever for GT Advanced and later changed the terms and conditions of the agreement after it was too late for the minor firm to pursue other opportunities.
GT Advanced Technologies (GTAT), the sapphire screen supplier for Apple’s mobile devices, filed for Chapter 11 protection in a bankruptcy court last month pleading to free it from all the contracts with the Cupertino-based company, calling it “oppressive and burdensome”.
“GTAT believes that it has many claims against Apple arising out of its business relationship. The agreements imposed oppressive and burdensome terms and obligations on GTAT,” the lawyers for the US-based screen manufacturer had said in the paperwork which was filed in the US Bankruptcy Court.
The two firms, however, later reached an agreement to part ways and allowed the smaller company to proceed with its bankruptcy. But Judge Henry Boroff turned down the requests by the firms to keep some of the documents in the case undisclosed.
In an agreement that was struck last year, GT Advanced outfitted a plant that was owned by Apple in Mesa, Arizona with sapphire furnaces that it would use to make scratch-resistant materials exclusively for Apple devices.
In a post, Squiller wrote: “With a classic bait-and-switch strategy, Apple presented GTAT with an onerous and massively one-sided deal in the fall of 2013.”
Meanwhile, unsealing another document on Friday, Apple termed the accusations made by GT Advanced as “scandalous and defamatory”.
According to Squiller, in the beginning of the negotiation, Apple has offered to purchase 2,600 sapphire growing furnaces from GT Advanced.
“In hindsight, it is unclear whether Apple even intended to purchase any sapphire furnaces from GTAT,” Squiller wrote.
Following months of hard negotiations, Apple finally offered a deal under which it would shift away the economic risk by lending the smaller company with the money to build the furnaces for production of the sapphire. These products were meant for exclusively sale to Apple for less than market value, Squiller wrote.
It was worse on the part of GT Advanced as it was forced to enter into the unfair deal in October 2013 as its elaborate negotiations with Apple had left it in solitary, restricting it to pursue deals with other smartphone making companies, he said.
In a separate filing, Apple said, “These statements are intended to vilify Apple and portray Apple as a coercive bully.”
The filing said that the GT Advanced was eagerly trying for the deal, while highlighting towards the more than 20 percent surge in the shares of GT Advanced after the agreement was unveiled.
In November of last year, GT Advanced Chief Executive Officer Tom Gutierrez told analysts on a quarterly conference call the company was “very pleased” to have made the agreement to supply sapphire to Apple.