Apples' sapphire screen supplier, GT Advanced Technologies, filed documents in bankruptcy court claiming its nondisclosure agreement carries a $50 million penalty for leaks. Further Apple secrets also could be revealed, as a judge approved GT's request to reveal more details of its confidential agreement.
The bankruptcy filing of GT Advanced Technoligies, supplier of Apple's highly touted sapphire displays, disclosed that Apple charges its suppliers $50 million for leaks under its extensive nondisclosure agreements, the mere acknowledgement of which Apple considers a leak in and of itself.
When GT Advanced, one of the main manufacturers and suppliers of Apples' much-publicized sapphire glass displays, filed for Chapter 11 bankruptcy on Oct. 6 and announced plans to lay off 890 workers, Wall Street, the technology world, and even Apple itself seemed surprised by the drastic move. Just as surprising and interesting, however, are the terms of the nondisclosure agreement which Apple requires its suppliers to sign.
Apple, more than any other technology manufacturer, goes to great lengths to keep release of most of the secret details surrounding its new products to a minimum. Though this year saw more leaks than in the past, with images and pictures of assembled casings for the iPhone 6 and iPhone 6 Plus flooding the Internet in the months and weeks leading up to Apple's announcement of the devices, Apple takes leaks very seriously and the terms of the nondisclosure agreement confirm this.
Filings by GT in bankruptcy court on Oct. 10 claim that the nondisclosure agreements required by Apple "provide that each breach of the confidentiality obligations will require GTAT Corp. to pay liquidated damages to Apple in an amount of $50m per occurrence," and that "Apple has treated the confidentiality agreement itself as 'confidential'."
GT requested (registration required) that it be able to reveal details of its relationship with Apple despite the "oppressive" nondisclosure agreement, "in the interest of their creditors, equity holders and other stakeholders, as well as to ensure an open, transparent and fair process," as it expects those details will bolster its case in bankruptcy court. "GTAT also believes that Congress's express desire for public access in bankruptcy cases . . . outweighs contractual demands for secrecy. However, absent express direction from the court, GTAT will not risk exposing itself to potentially hundreds of millions of dollars in additional liabilities."
The judge approved the request, which means it is likely that more details will surface surrounding not only the general terms of the agreements that Apple makes with it's suppliers, but also details on specs of the sapphire glass, which could reveal Apple's planned future devices, as well as cost and pricing details.
