Apple puts one of its biggest manufacturers on probation

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Apple won't give Pegatron new orders until it sorts out the issues.
Photo: Laurenz Heymann/Unsplash

Apple has placed Pegatron, one of its largest manufacturing partners, on probation after discovering the company violated Apple’s supplier code of contact. This relates to the unauthorized use of students carrying out overtime and night shifts.

Pegatron employees reportedly went “to extraordinary lengths” to cover up the wrongdoing. Apple has said that the manufacturing giant won’t get any new work from Apple until corrective action is made. However, it will continue building current iPhone handsets as per previous orders from Apple.

In a statement, Pegatron said that:

“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.”

Apple places Pegatron on probation

Apple carries out inspections of its third-party manufacturing partners. It did not find evidence of forced or underage labor at Pegatron’s factories. However, it supposedly did discover falsified paperwork intended to cover up the incident. Pegatron has fired the manager who was in charge of overseeing the student worker program.

This is far from the first time that Apple suppliers have been accused of wrongdoing or worker violations. Most famously, Foxconn — which is also going through a rough patch in its relationship with Apple — experienced a spate of worker suicides a decade ago. Much of the conversation at the time was about how this related to tough working conditions. The incident harmed not only Foxconn’s reputation, but also Apple’s — as its most best-known client. In 2017, a Pegatron mole meanwhile described work at a Pegatron factory as “torture.”

Under Tim Cook’s leadership, Apple has been proactively trying to stop human rights abuses in its supply chain. In the case of Pegatron, it seems that it will scramble to make changes in order to keep Apple’s business. But it could still dent the manufacturing company in its future work with Apple.

“Pegatron’s current iPhone business should not be affected,” GF Securities analyst Jeff Pu told Bloomberg. “However, it is likely that Pegatron will lose some orders for the Apple’s new handsets next year to Luxshare, which is poised to become a new iPhone assembler in 2021.”

Source: Bloomberg