Apple has suspended work with Pegatron, one of its biggest iPhone suppliers after Foxconn, due to worker abuse. Apple discovered various labor violations which Pegatron went to great lengths to hide from the company, however, it was caught and put on suspension until it cleans up its act.
Apple suspends work with Pegatron
Pegatron is one of the few iPhone assemblers in China that Apple has been working with for a long time. Apple has a strict code of conduct for its suppliers, ever since it faced a major backlash in mainstream media back in 2010, when Foxconn saw a string of suicides because it had less than satisfactory working conditions for its employees. Apple spent time and effort to ensure that the suppliers that it works with maintain decent working standards for their employees.
Due to the scale of Apple’s supply chain, it is not easy for the company to keep an eye on all its suppliers. However, it recently caught Pegatron using students as employees while classifying them as full time workers. The student worker even worked late nights and overtime, which Pegatron went to extreme lengths to hide from Apple by falsifying paperwork. Due to this, Apple has announced suspension until Pegatron remedies the situation.
This is an extraordinary move by Apple as it will definitely have an impact on its relationship with Pegatron in the future. The suspension already has an impact on Pegatron’s shares which have seen a dip of 2.1%, and might see further decline. It is important to note that this suspension does not affect current iPhone 12 manufacturing, or Pegatron’s plans to expand its manufacturing bases to India.
For its part, Pegatron has fired the manager who was caught falsifying paperwork, however, the issue likely happened because of more than one person.
Pegatron gave the following statement to Bloomberg on this issue:
“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. The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms.”
“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 was already in the news recently for its relationship with Foxconn turning sour, and will be looking to ensure that it has various suppliers available to work with on future products, such as Luxshare, which has been getting more business from the company ever since it started assembling AirPods.