Not much is known about Apple’s deals with its suppliers, but court filings by former sapphire supplier GT Advanced reveal that the contract included a $50M penalty for any leak of Apple product information, reports the Financial Times.
While the amount of the penalty clause may vary according to the size of the supplier, it seems likely that a substantial leak penalty is a standard condition of supplying product components to Apple – though the number of leaks over the iPhone 6 suggests that such penalties offer limited protection.
Contracts between Apple and its suppliers will undoubtedly be subject to strict non-disclosure agreements, but lawyers for GT Advanced are asking the court to allow details to be made public …
The argument is that Apple’s supplier agreement was “oppressive and burdensome,” suggesting that shareholders might seek compensation from Apple over the bankruptcy of GT Advanced.
Ahead of a court hearing on Wednesday in New Hampshire, GT’s lawyers are arguing that even more information about its relationship with Apple should be published, in the interests of creditors and shareholders.
Apple originally signed a five-year contract with the sapphire manufacturer, lending the company more than half a billion dollars to set up the plant in Arizona. It had been strongly rumored that at least high-end models of the iPhone 6/Plus would have a sapphire display, with Tim Cook fuelling speculation during an ABC interview (at the 2:30 time-point):
GT Advanced’s stock fell sharply when this turned out not to be the case. While Time suggested that this was never in Apple’s plans, the WSJ reported that it had been Apple’s intention to use sapphire for the iPhone, but that GT Advanced had been unable to meet this requirement – and that it was this that led to the company’s collapse.
The demise of GT Advanced is unlikely to impact Apple’s plans for the Apple Watch, says KGI, as there are sufficient competitor suppliers able to provide sapphire in the smaller sizes needed for this.
Should the court agree to the request, we may learn more about Apple’s contractual relationships with its suppliers in the coming days and weeks.
