Summary of GT ADVANCED TECHNOLOGIES INC.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions as described under the "Cautionary Statement Concerning Forward-Looking Statements," that appears above in this Annual Report on Form 10-K. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors, including those discussed under "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form 10-K.

Company Overview

GT Advanced Technologies Inc., through its subsidiaries (referred to collectively as "we," "us" and "our") is a global provider of polysilicon production technology and crystalline ingot growth systems and related photovoltaic manufacturing services for the solar industry, and sapphire growth systems and material for the LED and other specialty markets. Our customers include several of the world's largest solar companies as well as companies in the photonics and LED industries.

In August 2011, we acquired 100% of the outstanding shares of stock of privately-held Confluence Solar, Inc., or Confluence Solar, the developer of HiCz™, a continuously-fed Czochralski (HiCz™) growth technology, that is designed to enable the production of high efficiency monocrystalline solar ingots. The acquisition of Confluence Solar is intended to expand our PV product portfolio and expand our business into more advanced crystal growth technologies that are designed to increase cell efficiencies and enable our customers to produce high performance monocrystalline silicon at lower costs.

On November 18, 2011, we entered into an accelerated share repurchase agreement with UBS AG, under which we repurchased $75.0 million worth of shares of our common stock. The effective per share purchase price was be based generally on the average of the daily volume weighted average

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prices per share of our common stock, less a discount, calculated over the term of the accelerated share repurchase program. In connection with this agreement, we paid $75.0 million to UBS AG on November 23, 2011 and received approximately 7.8 million shares on that date, which was approximately 80% of the total shares repurchased under the accelerated share repurchase program. On March 6, 2012, we received notice from UBS AG of its intent to exercise and finalize the transaction with a valuation date of March 5, 2012. Prior to this notice, on March 5, 2012, UBS delivered 0.9 million shares of our common stock to us in anticipation of having to deliver shares to us as part of the final settlement. On March 8, 2012 UBS AG delivered another 0.7 million shares of our common stock pursuant to its notice of exercise to fully settle its obligations under the accelerated share repurchase agreement. The total number of shares ultimately repurchased under the accelerated share repurchase agreement was approximately 9.4 million shares based on an effective per share repurchase price of $7.95 per share, net of a discount. All of the shares received by us under this accelerated share repurchase program were canceled and retired upon receipt by us.

We operate through three business segments: our polysilicon business, our photovoltaic, or PV, business and our sapphire business.

Polysilicon Business

Our polysilicon business manufactures and sells silicon deposition reactors, or SDR, used to react gases at high temperatures to produce polysilicon, the key raw material used in silicon-based solar wafers and cells, while also offering engineering services and related equipment.

Photovoltaic Business

Our PV business manufactures and sells directional solidification, or DSS, crystallization furnaces and ancillary equipment used to cast crystalline silicon ingots by melting and cooling polysilicon in a precisely controlled process. These ingots are used to make photovoltaic wafers which are, in turn, used to make solar cells.

During fiscal year 2012, we made two advances in our PV segment. First, in January 2012, we announced the commercial availability of our new DSS MonoCast™ growth technology. This technology is designed to generate silicon ingots with greater efficiencies than the silicon ingots developed with multicrystalline growth equipment. This equipment solution was first offered as upgrades to certain DSS furnaces currently used by our customers. Second, we acquired Confluence Solar in August 2011, which is a producer of monocrystalline silicon materials using continuous Czochralski growth production methods. We are currently in the process of developing an equipment offering based on Confluence Solar's continuously-fed Czochralski (HiCz™) growth technology. While both our MonoCast™ equipment offering and our HiCz™ efforts are targeted at improving the ingot performance compared to that of multicrystalline silicon materials, we expect that, over an extended period of time, HiCz™ will ultimately supersede our MonoCast™ offerings. We have not yet commercialized the HiCz™ monocrystalline equipment, we do, however, expect to continue to sell HiCz™ monocrystalline material, manufactured at our pilot production plant in Hazelwood, Missouri, into select markets.

Sapphire Business

Our sapphire business manufactures and sells sapphire material and equipment. Our sapphire material is manufactured using our advanced sapphire crystal growth furnace, or ASF, that incorporate the Heat Exchanger Method, or HEM, technology. During fiscal year 2012 we began shipping and commissioning ASF systems for our customers and began recognizing revenue on these systems during the latter part of the fiscal year. In addition to selling ASF systems, we intend to continue production and sale of sapphire materials in selected specialty markets.

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Corporate Name Change and Change in Fiscal Year End

Effective August 8, 2011, we changed our name from GT Solar International, Inc. to GT Advanced Technologies Inc. The name change was effected pursuant to Delaware law by the merger of a wholly-owned subsidiary into the Company. In addition, on April 16, 2012, we amended our amended and restated by-laws to provide that our fiscal year will end on December 31 of each year. Prior to this amendment, our by-laws had provided that our fiscal year ended on the Saturday closest to March 31st of each year. As a result of this change to our fiscal year end, we will report a nine-month transition period consisting of the period from April 1, 2012 to December 31, 2012, and our 2013 fiscal year will begin on January 1, 2013 and end on December 31, 2013.

Factors Affecting the Results of Our Operations

Demand for our polysilicon and PV products and services are driven by end-user demand for solar power. Key drivers of the demand for solar power include: volatile prices of conventional energy sources; the desire for energy independence to counter perceived geopolitical supply risks surrounding fossil fuels; environmental pollution from fossil fuels and the resulting tightening of emission controls; the competitive cost of energy from alternative renewable energy sources; government incentive programs that make solar energy more cost competitive; and changing consumer preferences towards renewable energy sources. Demand for our sapphire products are driven by end-used demand for sapphire material, LED-quality material in particular. Key drivers of the demand for sapphire material include: adoption of sapphire components in consumer products and electronics, acceptance in the general lighting industry, the cost of sapphire compared to alternative technologies and the availability of sapphire material in the market which directly impacts the price that can be charged for sapphire material.

In each of our three business segments, the end-user demand for the output of our equipment has either declined substantially or supply has surpassed demand during the course of fiscal year 2012. As a result, the demand for our equipment offerings in each of our business segments became more limited as the year progressed. The market prices for polysilicon, solar cells and wafers and sapphire material, including LED material, have dropped significantly. In order to decrease inventories, we believe that companies selling polysilicon, solar cells and wafer and sapphire material, including some of our customers, have had to sell at prices that provide little or no margin. In some cases, we believe that these companies have been unable to reduce their inventories and, as a result of continued production of these materials, they are increasing their inventories. We are unable to determine when, and if, these inventories will decline or prices will recover. We expect that these circumstances will continue through the remainder of calendar year 2012 and beyond. As a result, we expect that the demand for our polysilicon, PV and sapphire equipment, and sapphire materials and HiCz materials (materials sales, however, make up a very small portion of our revenue) will continue to be very limited for the remainder of calendar year 2012 and beyond. As a result, much of our business for the remainder of calendar year 2012 will result from filling orders in our backlog and we do not expect, during this time, that our backlog will increase in a material amount.

The limited demand for our products due to market conditions is exacerbated by trade tensions between China and the U.S. On May 17, 2012, the U.S. Department of Commerce announced its preliminary determination that China had violated fair trade policies by "dumping" into the U.S. certain solar products at prices that were intended to advantage Chinese manufacturers. In connection with this ruling, certain Chinese solar cell and wafer manufacturers (including some of our equipment customers) had preliminary duties levied against them of approximately 31%. The Chinese government responded by saying the preliminary determination was deliberately provoking trade friction between the two nations. This follows a March 2012 action by the United States to impose preliminary punitive duties, in the single digits, on solar panels imported from China. The Department of Commerce is expected to issue final rulings on these matters later in the year. In addition, Congress has considered legislation targeting China's currency practices, which would, among other things, impose trade

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sanctions against Chinese companies that ship finished goods into the U.S. at artificially low prices caused by Chinese currency manipulation. The Chinese government has indicated that passage of this legislation or similar actions could lead to retaliatory tariffs. Retaliatory tariffs and trade tensions with China would have a material adverse impact on our business since we sell into China and our equipment customers sell end products into the U.S. In addition, if the U.S. government were to issue final determinations consistent with the preliminary determinations in 2012 or impose other duties on solar products from China, it would have a direct and negative effect on several of our PV customers who purchase our PV equipment and polysilicon equipment.

Changes in the global capital markets have resulted in a more stringent lending environment which in turn has caused decreased spending within the industries we serve. Our PV segment, for example, has reported decreased revenue of almost 50% for the fiscal year ended March 31, 2012 as compared to the prior fiscal year. We believe that this decrease is due, in part, to tighter lending conditions in all markets, particularly China. We believe the negative impact of a more stringent lending environment has resulted in decreased demand for our other products as well, including ASF units and polysilicon reactors. The international commercial lending environment has not stabilized and if the availability of capital or credit remains constrained (including in China) or if capital or credit were to become even more limited, we expect that the results of operations attributable to our PV business, and our other business segments, would continue to be negatively impacted.

In addition, the sovereign debt crisis in Europe has led to macroeconomic instability, depreciation of the euro, fiscal austerity, reduction in government support for certain programs and slowing growth in the entire region. While we generate only a small portion of our total revenue to sales to customers in Europe, a portion of the end-users of solar power and LED materials are located in Europe. We expect that customers for our equipment will be negatively impacted by the sovereign debt crisis and, as such, will have decreased demand for the silicon and sapphire materials generated using our equipment. In addition, the solar industry in Europe has relied upon governmental support to foster its growth and the debt crisis (and general economic slowdown) we believe has caused governments to withdraw or eliminate their support and incentives for solar power. We expect that this crisis will cause a further decrease in demand for our polysilicon, sapphire and PV equipment offerings. Given the continued uncertainty in European markets, it is impossible to determine how long this period of instability will continue. In addition, there is increasing evidence that this economic instability is impacting other regions as well, including China (the European Union is China's largest trading partner) and will impact our equipment customers.

We are required to make a significant upfront investment in order to fill orders for our PV, polysilicon and sapphire production equipment. In the past we have had customers for our DSS furnaces and SDR reactors place orders and fail to make payments (and while we did not complete these orders, we incurred certain expenses in order to prepare to complete delivery under the contract terms, including non-refundable deposits we were required to make to certain vendors and suppliers). In an attempt to mitigate such risks, we generally require our customers to make non-refundable deposits and/or provide letters of credit on most polysilicon, PV and sapphire equipment orders. These advances, however, may not cover all of the expenses we incur in preparing to fill the applicable order. In addition, we have negotiated extensions of the delivery schedules and other modifications under some of our existing contracts and we expect similar negotiations to occur in the future. When customers fail to make a deposit when due under their contracts, we may terminate, and have terminated, certain of those contracts. When we renegotiate terms of existing contracts with our customers, such negotiations may result in a change in the timing of deliveries, reduction in the number of units to be delivered and a change in other terms, which may have an impact on our results of operations as more fully described under the heading "Order Backlog."

There is an excess of polysilicon manufacturing capacity and the market price for polysilicon has significantly declined. Those market participants without the ability to produce polysilicon efficiently will be unable to operate profitably in a lower polysilicon price environment. Accordingly, we expect

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that there will be an even greater focus on reducing production costs among polysilicon manufacturers. Since polysilicon production equipment is one of the principal factors that accounts for the costs of polysilicon production for manufacturers, we expect that for the future there will be substantial pressure by our customers to lower the cost of equipment or they may delay or cancel their purchases of polysilicon production equipment. In the face of a consolidating market, we will need to be positioned to capture a portion of the future demand for polysilicon equipment among the more limited number of manufacturers by delivering equipment with higher throughput and lower power consumption, leading to greater efficiencies. However, the timing of any future purchases is uncertain and it may be a significant amount of time before we see the benefits of any purchases of equipment, if at all.

We believe that, due to limited demand or oversupply, consolidation within the solar industry and increasing cost pressures, some of our PV customers have lowered capacity utilization rates and delayed or terminated expansion projects as they respond to weaker end market demand. Further, due to higher efficiencies offered by monocrystalline silicon and advances in monocrystalline silicon production technology, we may experience a longer contraction (or permanent reduction) in end user demand for multicrystalline silicon solar modules than in the past. This contraction has resulted in increased pressure on the margins for our PV products. It is not possible to determine when market demand for multicrystalline solar products will return with any certainty, or if it will return at all (particularly as a result of improvements in monocrystalline growth technologies). In an effort to respond to anticipated future demand for monocrystalline silicon, in January 2012 we commercially launched our DSS MonoCast™ growth technology, which generates refined silicon ingots with the potential to constitute to higher cell efficiencies than multicrystalline ingots. In addition, in August 2011, we purchased Confluence Solar which is a manufacturer of monocrystalline silicon material using the continuously-fed Czochralski growth technology. We are developing an equipment offering based on this HiCz™ growth process and we are targeting commercial release in the first half of calendar 2013. While both the MonoCast™ equipment and our anticipated HiCz™ offering will both improve the ingot performance compared to that of multi-crystalline silicon materials, we expect that, over an extended period of time, HiCz™ equipment will ultimately supersede our MonoCast™ equipment offerings. There are, however, no certainties that there will be any meaningful demand for monocrystalline silicon or that the prices charged to manufacture such silicon will make our MonoCast™ or HiCz™ products attractive to end-users and these offering may not replace the revenue that we generated in the past with the DSS multicrystalline furnace.

Demand for PV on-grid applications, which in turn impacts the demand for PV manufacturing equipment, has historically been dependent in part on the availability and size of government subsidies and economic incentives. As noted above, we believe that the ability of governments to provide economic incentives have been significantly impacted by the recent global economic downturn, particularly in Europe, where many of the end-users for solar wafers and cells are located. For example, Germany, which has among the world's largest PV installed base, has implemented reductions in solar feed-in tariff rates for certain solar systems and further reductions in solar feed-in tariff rates may be made in the future. We believe that governments are moving more aggressively than they have in the past to reduce all forms of governmental assistance to the solar industry and we expect that governmental subsidies, feed-in tariffs and similar supports will be eliminated in their entirety in the near future. It is difficult to determine the impact that a changing incentive program has on solar module demand and our customers' ability to sell solar modules in a particular geographic market, particularly Europe. We believe decreasing costs within the solar value chain will reduce the effect of tariffs on the investment returns for solar projects. The changing environment for such government incentive programs, however, creates uncertainty for the solar industry.

During fiscal year 2012 we began shipping and commissioning ASF systems for our customers and began recognizing revenue on these systems during the latter part of the fiscal year. As more of our ASF units are accepted by customers, we expect that revenues attributable to our sapphire equipment

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will be significantly larger than revenue from our sapphire material. As noted above, the price for sapphire material has recently experienced significant decrease. We anticipate long-term demand for sapphire material will be driven, in large part, by general illumination manufacturers. However, in the short-term, the decreased demand for sapphire materials, including among illumination companies, may negatively impact demand for our materials and ASF systems and may delay the timing of which amounts attributable to materials and ASF systems roll-off of backlog and into revenue and the timing on which we enter into new contracts to sell ASF systems. We are unable to estimate when the price of sapphire material will recover, but we do expect the current decreased prices to continue for the short-term. In addition, while we do offer training in connection with the sale of ASF systems, at certain customer sites, we have discovered that those customers have not yet hired or sufficiently trained their personnel and have not yet instituted the equipment operations procedures necessary to properly run the ASF system they purchased. As a result, we believe the ASF systems at certain of our customer's sites have generated sapphire material that is not salable. Additionally, even in those cases where the sapphire boule was to specification, the boule has not always been properly oriented by the customer and some or all of the value of the sapphire boule was lost as it was sliced and cored. If our customers do not have the manufacturing expertise to operate the ASF systems and properly orient sapphire boules, they may be delayed in ramping up their operations and sapphire manufacturing operations, we may not recognize revenue from the sale of these systems (or such recognition may be delayed) and the ASF systems may not gain wider market acceptance.

Our results of operations are also affected by when we are able to recognize revenue under our PV, polysilicon and ASF system contracts. Our revenue recognition policies require us to defer revenue recognition in certain circumstances from shipped equipment and recognize revenue at a later date as more fully described under the caption "Note 2-Significant Accounting Policies-Revenue Recognition" in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Other factors affecting operations include delays in customer acceptances of our products, delays of deliveries of ordered products and our rate of progress in the fulfillment of our obligations under our contracts. A delay in deliveries or cancellations of orders would cause us to have inventories in excess of our short-term needs, and may delay our ability to recognize, or prevent us from recognizing, revenue on contracts in our order backlog and result in losses for advancements or other payments made to vendors and suppliers that cannot be cancelled.

Our business plan is focused on growing and diversifying our product and technology offerings. We expect that achieving these goals of growth and diversification will include the acquisition of businesses and technologies from third parties. In order to achieve our objective of diversifying our business to technologies outside of polysilicon, PV and sapphire, we expect that some of these acquisitions will be in markets or industries that are unrelated to those markets we currently serve. We are, however, an equipment company and we currently expect that future acquisitions will continue to be for the purpose of accessing technologies that will enable us to provide industrial equipment to our customers. This business diversification plan involves risks. As a result of these potential future acquisitions, our company may be viewed by the market in the future as other than a solar and sapphire company and our stock may be valued differently than is currently the case depending on what markets we serve in the future. Diversification may also require significant time and resource commitments from our senior management, which will limit the amount of time these individuals will have available to devote to our existing operations. Also, we may be unable to successfully complete acquisitions or effectively integrate them into our operations.

In addition, our results of operations are affected by a number of other factors including the availability and market price of polysilicon, alumina material and certain process consumables, availability of raw materials, foreign exchange rates, interest rates, commodity prices (including molybdenum, steel and graphite prices) and macroeconomic factors, including the availability of capital that may be needed by our customers, as well as political, regulatory and legal conditions in the international markets in which we conduct business, including China.

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Acquisition of Confluence Solar, Inc.

On August 24, 2011, we acquired 100% of the outstanding shares of stock of privately-held Confluence Solar, Inc., the developer of HiCz™, a continuously-fed Czochralski (HiCz™) growth technology that is designed to enable the production of high efficiency monocrystalline solar ingots. The purchase consideration consisted of $60.6 million, net of a working capital adjustment of $0.5 million, and a potential additional $20.0 million of contingent consideration based on the attainment of a financial target, an operational target and certain technical targets.

The acquisition of Confluence Solar is intended to expand our PV product portfolio and expand our business into more advanced crystal growth technologies that are designed to increase cell efficiencies and enable our customers to produce high performance monocrystalline silicon at lower costs. We expect that, over an extended period of time, the Confluence Solar technologies will ultimately replace our own DSS and DSS MonoCast™ equipment. At this time, our efforts in the HiCz™ crystal growth area are focused on commercializing equipment technologies for monocrystalline silicon producers, although we are still in the development stage and no product is commercially available. We will, however, continue to sell limited volumes of HiCz™ material to customers in selected markets.

We are obligated to make expenditures in the Confluence Solar business to fund capital purchases of at least $25.0 million, which is expected to be substantially funded by the middle of the calendar year 2012.

The transaction has been accounted for as a business combination and is included in our results of operations beginning on August 24, 2011, the date of acquisition. The acquired business did not contribute material revenues for the period from August 24, 2011 to March 31, 2012. The results of the acquired business are included in our PV business segment.

Order Backlog

Our order backlog primarily consists of amounts due under written contractual commitments and signed purchase orders for PV, polysilicon and sapphire equipment not yet shipped to customers, deferred revenue (which represents amounts for equipment that has been shipped to customers but not yet recognized as revenue) and short-term contracts or sales orders for sapphire materials. Substantially all of the contracts in our order backlog for PV, polysilicon and sapphire equipment require the customer to either post a standby letter of credit in our favor and/or make advance payment prior to shipment of equipment.

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