Apple is putting one of its suppliers on timeout as the new iPhone 12 continues to move through production.
Reports today from Bloomberg show that Apple is putting Pegatron, a supplier, on probation.
It’s not the first upset of its kind where Apple takes aim at supplier activity that can compromise its brand.
“Apple spent years upbraiding manufacturers after a rash of suicides at main partner Foxconn in 2010 provoked outrage over the harsh working environments in which its upscale gadgets were made,” write Debby Wu and Mark Gurman at Bloomberg. “Soon after, Apple tightened 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. But the sheer scale of the chain makes policing difficult. Foxconn and Catcher Technology Co. were among those called out in the past for flouting local regulations.”
This censure by an American company is unlike a lot of the activity that’s been going on between U.S. firms and Asian companies in recent months. First of all, Pegatron is in Taiwan, not mainland China, which means that the disconnect is unlikely to ratchet up tensions between the U.S. and China where various trade wars and blacklisting have created quite a bit of friction.
Also, Apple’s disconnection with Pegatron does not involve concerns about national security, like the blacklisting of TikTok, WeChat and Huawei proposed recently by the U.S. President. Instead, the kerfuffle is about labor: the company says Pegatron misclassified student workers, who worked night shifts and overtime in violation of regulatory rules at the Shanghai and Kunshan campuses.
Apple further alleges that Pegatron leaders went to “extraordinary lengths” to falsify paperwork related to the violations.
Some of the people responsible have already been fired, and Pegatron is hoping to move back into Apple’s good graces.
“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 press statement.
However, some damage has already been done.
Experts say the news is going to benefit a competing company, Luxshare, which has also supplied similar services to Apple.
