GT Advanced to shut down Ariz. plant, cut ties with Apple About 890 jobs may be lost from shutting down its sapphire operati

GT claims it burned through cash preparing sapphire for Apple, which many predicted was for the iPhone's display.CNET

Apple supplier GT Advanced is moving forward with plans to reject about a dozen agreements with Apple and wind down its massive sapphire-production facility in Mesa, Ariz.

In bankruptcy-court filings made public Friday, the company came forward with an explanation for itssurprise Chapter 11 bankruptcy protection filingMonday, saying the cash burn from operating the Arizona sapphire-production plant for Apple wasn't sustainable and it needed to end work there to preserve the company.

In the filings, a judge granted some initial step in the process for the Merrimack, N.H.-based company to end its agreements with Apple and shut down sapphire-manufacturing plants in Mesa and Salem, Mass., by year's end, which would result in the loss of 890 jobs. GT has about 1,100 full-time employees.

The filings present a sudden about-face from GT, which less than a year ago agreed to produce artificial sapphire for Apple, but is now seeking to abandon that work entirely and get back to its primary business of selling sapphire equipment. "Only if GTAT winds down these operations will it be able to stop its mounting losses and re-focus its resources on the operation of its core business of selling sapphire furnaces and other products," the company, which also refers to itself as GTAT, said in a filing.

In its requests to the court, GT said "the agreements imposed oppressive and burdensome terms and obligations" on the company, adding that "continued performance under the Agreements is no longer a viable business option." It also said in court papers that it found operating under its agreements with Apple "constitute an unnecessary drain" on its resources and it wanted to reject the deals under the bankruptcy code.

GT this week shocked investors and industry watchers by filing for Chapter 11 bankruptcy protection, claiming an undefined "severe liquidity crisis." The move wiped out nearly all the company's market value, roughly $1.5 billion, in a matter of minutes.