Lessons From an Apple Supplier Debacle

Apple is known for consistently maintaining a smooth-running global supply chain. But every once in a while, something blows up. That's what happened in the relationship between Apple Inc. and GT Advanced Technologies, which was contracted to supply sapphire for the new iPhone 6 screens. The deal carried enormous promise, not least because it involved manufacturing in the U.S. But it quickly went sour. Despite the existence of seven separate contracts, GTAT was unable to deliver on Apple’s demands. The reason for the failure? Depends on whom you ask. But the outcome isn't in dispute: the two parties descended into acrimony and expensive court proceedings, and GTAT ended up seeking protection under Chapter 11 of U.S. bankruptcy laws. On this episode, attorney Sarah K. Rathke, partner with Squire Patton Boggs, offers her perspective on what went wrong between Apple and GTAT. And she details the lessons to be learned from that disaster, with tips on how other manufacturers and suppliers can avoid a similar fate.