Apple suspends new orders with Pegatron after labor abuse

Apple iPhone assembler Pegatron will reportedly receive no new business from the Cupertino company until it takes action to prevent student labor violations.

Shortly after investing $1 billion in a new Vietnamese plant, iPhone assembly partner Pegatron has been told it will receive no new orders from Apple until concerns over labor issues have been resolved.

According to Bloomberg, Apple discovered that Pegatron had been reclassifying students as regular workers, meaning they would receive overtime and work at night.

"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 a statement seen by Bloomberg

"The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms," it continued.

Apple also said that it had discovered Pegatron falsified paperwork to hide these violations. It did not find evidence of underage or forced labor. One Pegatron manager has been fired.

"We are working on the corrective actions and are confident that we will complete it soon," a Pegatron spokesperson told Bloomberg

It's unclear what orders Pegatron will now fail to get, or whether Apple has imposed any time limits. Pegatron's work in assembling iPhones is to continue, at least until the current order is completed.

However, future orders may instead be placed with Pegatron's rivals, such as Luxshare. Both Pegatron and Luxhare have invested in Vietnam plants for Apple, but Apple has reportedly been hesitant over moving iPhone production to the country because of workers' living conditions.

27 Comments

22july2013 3716 comments · 11 Years

About 3 years ago

Reading between the lines, it seems that Apple knows it is in a position of power here and is using its power to obtain certain objectives. I just wish Apple knew that it's also in a position of power with regard to its App Store and start behaving just as tough in that business line.

Rayz2016 6957 comments · 8 Years

Putting their diversified supply chain where their mouth is.

I imagine that Pegatron will have this all fixed by the start of December. (Though I also said that Spotify would fix their hypocrisy and allow developers to transfer subscriber playlists to other services, and I was wrong about that)

WarrenBuffduckh 158 comments · 5 Years

Apple: Stop this abuse.
Pega: Wow. You pay us 1% of the iPhone sales price, roughly $9 bucks to assemble this.
We had to undercut to get the job. So what do you expect ?
Apple: That’s just natural competition.

GeorgeBMac 11421 comments · 8 Years

Double Standards....

No other company would have done this. Or, if they did it would have been a behind closed doors request.

But, Apple is held to a different standard: if word got out that it was using (in any way) improper child labor people's heads would explode. It would be like the Pope swearing when he stubs his toe. Neither is permitted even the slightest, most minor of infractions. And, if and when they do, outrage ensues....

Very simply, the double standard means Apple has to be the perfect saint.

It's not fair. And, they may have brought it on themselves. But that's just the way it is.