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.
SEEKING CLARITY: Washington should not adopt measures that create uncertainties for ‘existing semiconductor investments,’ TSMC said referring to its US$165 billion in the US Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) told the US that any future tariffs on Taiwanese semiconductors could reduce demand for chips and derail its pledge to increase its investment in Arizona. “New import restrictions could jeopardize current US leadership in the competitive technology industry and create uncertainties for many committed semiconductor capital projects in the US, including TSMC Arizona’s significant investment plan in Phoenix,” the chipmaker wrote in a letter to the US Department of Commerce. TSMC issued the warning in response to a solicitation for comments by the department on a possible tariff on semiconductor imports by US President Donald Trump’s
The government has launched a three-pronged strategy to attract local and international talent, aiming to position Taiwan as a new global hub following Nvidia Corp’s announcement that it has chosen Taipei as the site of its Taiwan headquarters. Nvidia cofounder and CEO Jensen Huang (黃仁勳) on Monday last week announced during his keynote speech at the Computex trade show in Taipei that the Nvidia Constellation, the company’s planned Taiwan headquarters, would be located in the Beitou-Shilin Technology Park (北投士林科技園區) in Taipei. Huang’s decision to establish a base in Taiwan is “primarily due to Taiwan’s talent pool and its strength in the semiconductor
An earnings report from semiconductor giant and artificial intelligence (AI) bellwether Nvidia Corp takes center stage for Wall Street this week, as stocks hit a speed bump of worries over US federal deficits driving up Treasury yields. US equities pulled back last week after a torrid rally, as investors turned their attention to tax and spending legislation poised to swell the US government’s US$36 trillion in debt. Long-dated US Treasury yields rose amid the fiscal worries, with the 30-year yield topping 5 percent and hitting its highest level since late 2023. Stocks were dealt another blow on Friday when US President Donald
Industrial production expanded 22.31 percent annually last month to 107.51, as increases in demand for high-performance computing (HPC) and artificial intelligence (AI) applications drove demand for locally-made chips and components. The manufacturing production index climbed 23.68 percent year-on-year to 108.37, marking the 14th consecutive month of increase, the Ministry of Economic Affairs said. In the first four months of this year, industrial and manufacturing production indices expanded 14.31 percent and 15.22 percent year-on-year, ministry data showed. The growth momentum is to extend into this month, with the manufacturing production index expected to rise between 11 percent and 15.1 percent annually, Department of Statistics
RSS