Three 15-kg sapphire boules.
By Philip Elmer-DeWitt
October 6, 2014

It’s hasn’t even been a year since Gov. Jan Brewer was saying how thrilled she was to welcome Apple to Arizona, and Apple, in turn, how proud it was to be building its second domestic factory in a decade in her state.

So it’s a bit of a surprise that the company would let the object of this mutual backslapping — GT Advanced Technologies (GTAT) — get so deep in the hole that it had to file for bankruptcy Monday. Trading in the company was briefly halted, and when it reopened GT’s shares had dropped 90%, to $1.06.

“GT has a strong and fundamentally sound underlying business,” said president Tom Gutierrez in a press release. “Today’s filing does not mean we are going out of business; rather, it provides us with the opportunity to continue to execute our business plan on a stronger footing, maintain operations of our diversified business, and improve our balance sheet.”

GT is Apple’s major — if not sole — supplier of the sapphire used in iPhone camera lenses, and the timing of its expansion in Mesa, AZ, coincided with the development of the Apple Watch unveiled last month. Two of the three models due out next year will have sapphire crystals, although the entry level ($349) model — the one likely to be the bestseller — does not.

There was speculation that Apple might also be putting GT sapphire on the faces of the iPhone 6 and 6 Plus, and the stock took a beating in early September when those rumors proved false.

Apple’s investment in the Arizona project was relatively small. It paid $113 million for an empty factory and gave GT a five-year, $578 million loan to purchase, install and operate what was billed as the world’s largest sapphire plant.

GT got a bump in income and a lot of free press, but as Bernstein’s Toni Sacconaghi noted at the time, it was also assuming most of the risk. By Sept. 29 it’s cash hoard had shrunk to $85 million and it could no longer pay its creditors.

It’s not clear from the press release who those creditors might be, or what brought things to this pass.

No comment yet from Apple.

UPDATE: By Monday evening, the Wall Street Journal’s Daisuke Wakabayashi had been briefed by “people familiar with the matter”:

The bankruptcy filing comes less than a month after Apple unveiled new iPhones with glass screens, rather than sapphire. Apple’s decision not to use sapphire followed tests in which the synthetic sapphire proved brittle, cracking when phones were dropped from various heights and angles, according to people familiar with the matter.

The final straw for GT appears to be Apple withholding a $139 million payment, according to people familiar with the matter. That was to be the last of four prepayments from Apple to GT totaling $578 million. In August, GT had said that it expected the last payment to arrive by the end of October—contingent on meeting certain operational targets at the plant in Mesa, Ariz.

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Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at fortune.com/ped or subscribe via his RSS feed.

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