Apple Inc suspended new business with iPhone assembler Pegatron Corp (和碩) after discovering labor violations at a student workers’ program, taking strong action to clean up a Chinese-based production chain long accused of worker abuse.
The Cupertino, California-based technology giant said that it discovered several weeks ago that the Taiwanese manufacturer misclassified student workers in China and allowed some to work nights and overtime in violation of Apple’s Supplier Code of Conduct.
Employees then “went to extraordinary lengths” to cover up the violations.
Photo: David Chang, EPA-EFE
It has since placed its partner on probation until corrective action is completed, the US company said in a statement.
Pegatron is one of just a handful of partners Apple relies on globally to assemble marquee products such as the iPhone.
Like larger rival Foxconn Technology Group (富士康科技集團) — known as Hon Hai Precision Industry Co (鴻海精密) in Taiwan — the company is an integral part of Apple’s global supply chain, which has been the target of criticism by labor activists over the years.
The world’s most valuable company is in the middle of producing four new iPhone models with 5G, and has been working with Pegatron to expand iPhone assembly outside of China.
Those efforts are unlikely to be impacted by this suspension, which was first reported by local outlet The Paper, as it only covers new business.
However, Apple’s move hands an opening to rival Luxshare Precision Industry Co (立訊精密), which is on the verge of becoming the first Chinese firm to assemble the iPhone.
Pegatron’s shares gave up gains and closed down 2.1 percent in Taipei yesterday.
“Pegatron’s current iPhone business should not be affected. However, it is likely that Pegatron will lose some orders for Apple’s new handsets next year to Luxshare, which is poised to become a new iPhone assembler in 2021,” GF Securities (Hong Kong) Brokerage Ltd (廣發證券香港) analyst Jeff Pu (蒲得宇) said.
Apple spent years upbraiding manufacturers after a rash of suicides in 2010 at Foxconn provoked outrage over the harsh working environments in which its upscale gadgets were made.
Soon after, Apple developed standards and started audits of the hundreds of companies that produce components for its devices, threatening to pull business from those who defy labor laws.
However, the sheer scale of the chain makes policing difficult. Foxconn and Catcher Technology Co (可成科技) were among those called out in the past for flouting local regulations.
Apple said that it did not find evidence of forced or underage labor in Pegatron’s case, but discovered the supplier falsified paperwork to hide violations.
Pegatron has fired the manager who oversaw the student worker program, it added.
“Pegatron misclassified the student workers in their program and falsified paperwork to disguise violations of our code, including allowing students to work nights and/or overtime and in some cases to perform work unrelated to their major,” Apple said in its statement. “The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms.”
Pegatron said the violations took place at its Shanghai and Kunshan campuses and that students working night shifts, overtime, and in positions unrelated to their majors were “not in compliance with local rules and regulations.”
The company said it has taken “quick action” to strengthen its procedures, and would add adherence to the code of conduct to metrics used to evaluate senior management.
“Upon discovery of this non-compliant activity, we immediately took the student workers off production lines and worked with our customer and third-party experts to make appropriate arrangements for them to return to their homes or schools with proper compensation alongside all necessary support and care,” Pegatron said in a statement.
Taiwanese suppliers to Taiwan Semiconductor Manufacturing Co. (TSMC, 台積電) are expected to follow the contract chipmaker’s step to invest in the US, but their relocation may be seven to eight years away, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. When asked by opposition Chinese Nationalist Party (KMT) Legislator Niu Hsu-ting (牛煦庭) in the legislature about growing concerns that TSMC’s huge investments in the US will prompt its suppliers to follow suit, Kuo said based on the chipmaker’s current limited production volume, it is unlikely to lead its supply chain to go there for now. “Unless TSMC completes its planned six
Intel Corp has named Tasha Chuang (莊蓓瑜) to lead Intel Taiwan in a bid to reinforce relations between the company and its Taiwanese partners. The appointment of Chuang as general manager for Intel Taiwan takes effect on Thursday, the firm said in a statement yesterday. Chuang is to lead her team in Taiwan to pursue product development and sales growth in an effort to reinforce the company’s ties with its partners and clients, Intel said. Chuang was previously in charge of managing Intel’s ties with leading Taiwanese PC brand Asustek Computer Inc (華碩), which included helping Asustek strengthen its global businesses, the company
Power supply and electronic components maker Delta Electronics Inc (台達電) yesterday said second-quarter revenue is expected to surpass the first quarter, which rose 30 percent year-on-year to NT$118.92 billion (US$3.71 billion). Revenue this quarter is likely to grow, as US clients have front-loaded orders ahead of US President Donald Trump’s planned tariffs on Taiwanese goods, Delta chairman Ping Cheng (鄭平) said at an earnings conference in Taipei, referring to the 90-day pause in tariff implementation Trump announced on April 9. While situations in the third and fourth quarters remain unclear, “We will not halt our long-term deployments and do not plan to
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
RSS