According to a report from The Wall Street Journal, President Barack Obama is set to announce a new program called “SupplierPay” to help boost small businesses, and Apple is one of the 26 companies listed as having already signed on.
The program intends to send money down the supply chain and help strengthen contractors and smaller businesses by giving them access to lower-cost capital and thereby opening up opportunities for hiring more workers. This, the White House hopes, will increase investments at the small business level as well. Expand Expanding Close
Apple’s lead manufacturer Foxconn reported a 13 percent rise in net profit to 106.7B new Taiwan dollars (US$3.5B) following record iPhone and iPad sales, reports the WSJ. More than 40 percent of the company’s revenue comes from Apple.
The news comes a few days after Apple supplier Pegatron reported a 22 percent rise in earnings.
Hon Hai’s results were underpinned by demand from Cupertino, Calif.-based Apple, which sold 51 million iPhones in its fiscal first quarter ended Dec. 28, 2013—up 7% from the same period the previous year […]
Apple also said it sold a record 26 million iPads in the quarter, compared with 22.9 million in the year-ago period …
Pegatron, Apple’s main supplier for the iPhone 5c, has reported 22 percent year-on-year earnings growth, citing mobile products as the main source of the increase. KGI Securities analyst Angela Hsiang told the WSJ that Apple provides 40 percent of the company’s business.
Pegatron has long been a secondary iPhone supplier, but was last year given the lead in production of the iPhone 5c, which it manufactures along with the iPad Mini. The company did not provide any breakdown in earnings between the two products.
Although the earnings increase is a big rise, the company’s operating margin is testament to the tough deals Apple strikes with its suppliers: Pegatron’s operating margin increased from 1.6 percent to 1.9 percent.
Pegatron is expected to share production of the iPhone 6 with Apple’s lead supplier Foxconn.
Alongside the release of Apple’s supplier responsibility report today highlighting working conditions within its supply chain, Apple’s Senior Vice President of Operations Jeff Williams has also sent out a letter to employees. In the past, CEO Tim Cook has been known to send out an email to employees following the supplier report. In today’s letter, Williams went over some of the key points from the supplier responsibility report and noted, “to drive accountability, we are now publishing a quarterly list of the names, countries, and participation status of the smelters and refiners in our supply chain.” Williams also mentioned new education programs, the launch of the Apple Supplier Environment, Health, and Safety Academy, and more.
The full letter from Williams only accessible to employees is below: Expand Expanding Close
Apple’s eighth annual Supplier Responsibility Progress Report highlights the progress made on reducing child labor and enforcing working hour limits, and shows a significant increase in the environmental standards Apple’s suppliers are expected to meet.
The number of cases of underage workers fell from 106 last year to 11 this year. Compliance with Apple’s requirement of a maximum working week of 60 hours hit 95 percent, with 97 percent meeting the requirement of at least one day off a week. Apple reported that the average working week of a supply chain employee was less than 50 hours … Expand Expanding Close
The Wall Street Journal reports that Apple has shipped approximately 1.4 million iPhone 5S units to China Mobile in preparation of the carrier’s iPhone launch on Jan. 17. The report notes it likely doesn’t present sales for the full month of January with preorders having kicked off under three weeks ago, but it is a good indication of how many new iPhone customers Apple could potentially get on a monthly basis through the deal:
“Shipping one million or more iPhones to a single carrier per month is substantial. But we have limited visibility beyond this month as Apple hasn’t informed Foxconn of the volume for the next shipment to China Mobile,” said the person.
Apple finally made things official last month when it announced in a press release that it had struck a deal with China Mobile to begin selling the iPhone 5s and 5c, marking the first time the iPhone would be sold through the carrier’s retail stores. China Mobile, the world’s largest carrier with over 760 million subscribers, started taking preorders for the device on December 25 following Apple’s announcement. No word on estimates for iPhone 5c shipments, but China Mobile is set to begin selling that device too starting Friday.
Update: Apple has issued a statement stating that it sent medical experts to investigate and found no link to the boy’s employment. It has not commented on the fact that the worker was under-age, but it has been revealed that he used his 21-year-old cousin’s ID to get the job.
Last month we sent independent medical experts from the U.S. and China to conduct an investigation of the (Pegatron) factory. While they have found no evidence of any link to working conditions there, we realize that is of little comfort to the families who have lost their loved ones.
Apple has a long-standing commitment to providing a safe and healthy workplace for every worker in our supply chain, and we have a team working with Pegatron at their facility to ensure that conditions meet our high standards.
Original story:
China Labor Watch says Pegatron has failed to properly explain the deaths of five young workers at a factory making the iPhone 5c, including one who was found to be just 15 years old, reports the Sydney Morning Herald.
Pegatron, the Taiwanese manufacturer that employed him, said the workplace environment at the Shanghai plant was not the cause of his illness. But a spokeswoman acknowledged that several other young workers at the factory had also died in the past few months […]
“Considering the sudden deaths of five people and the similar reason of the deaths, we believe there should be some relations between the tragedy and the working conditions in the factory,” said Li Qiang, who runs China Labor Watch … Expand Expanding Close
A report from Korea’s ETNewshas outlined a series of claims pointing to dramatic shifts in display technologies for Apple devices. Over the next year, the report says that Apple is expected to redefine its screens for iPhones, iPads, and MacBooks. Here are the reported display trends:
iPhones will move to screens larger than 5-inches
iPads will be diversified into entry-level and premium models depending on display size. This report reiterates claims of a 12.9/13-inch model
iPad mini will gain a higher-resolution display next year
OLED displays will be integrated into Apple products, including Apple’s upcoming “iWatch”
More power-efficient LED displays for MacBooks
Further, the report claims that Apple will continue to use displays from Japan Display, but the company will increase its reliance on both LG and Samsung for screens
China Labor Watch, the organization behind the report accusing Apple supplier Pegatron of poor treatment of workers (that, in passing, seemingly confirmed that the iPhone 5C was plastic-bodied), has now made fresh allegations against Jabil Circuit, a company it says is also involved in production of the 5C.
Among the infringements uncovered by CLW include millions of dollars in unpaid overtime wages; over 100 hours of monthly mandatory overtime, three times in excess of legal limits; more than 11 hours of standing work every day with no rest outside of 30-minute meal breaks; illegally inadequate pre-work training; hiring discrimination; and more.
Apple previously responded to the Pegatron report with a lengthy statement on the steps already taken and the further steps it planned to take. Apple publishes an annual Supplier Responsibility Report and conducts frequent audits of its suppliers, along with commissioning the independent non-profit Fair Labor Association to conduct independent audits.
Jabil Circuit has not yet been confirmed as an Apple supplier. The iPhone 5C is expected to be unveiled on 10th September.
A Foxconn assembly line (photo: digitaltrends.com)
The WSJ reports that authorities in China are investigating claims that two of Apple’s suppliers – Foxconn and UniMicron – are releasing water polluted by heavy metals into local rivers. Expand Expanding Close
According to an upcoming report from the China Labor Watch, outlined by the Wall Street Journal, Apple’s China-based manufacturing partner Pegatron has come under fire for worker conditions. The report outlines several claims which shed a negative light on Pegatron:
Pegatron is claimed to be withholding worker IDs. This means that Pegatron employees are unable to work elsewhere because they lack proper identification.
The company is also claimed to be providing “poor living conditions” with “30-minute waits to enter their production facility, tight living quarters, and packed cafeterias.” Cold showers and packed dorms are also noted.
Workers are claimed to be working over 60 hours a week (Apple’s limit), while Apple’s June Supplier Responsibility paper points to a 46-hour work-week average for Pegatron employees.
At a Pegatron subsidiary, employees are said to be provided gloves that do not sufficiently protect from the materials used to create metal backplates for the iPad.
As for pay, the report claims that some workers are seeing their payment withheld. Within this issue, recruiting companies for Pegatron have come under fire for not paying the workers enough. These recruiting companies, in some situations, are even fining employees:
According to a report from the Wall Street Journal, Apple and its suppliers are testing versions of the iPad and iPhone with larger displays.
Apple and its Asian component makers are testing larger screens for iPhones and tablets, officials at the company’s suppliers say.
Due to mounting competition from hardware competitors like Samsung, a larger-screened iPhone has long been expected and rumored. However, this is one of the first specific claims for a larger sized iPad. In March of this year, an unverified claim emerged for a 12.9-inch iPad model being in the works with a rather unlikely name. WSJ‘s report points to a display “measuring slightly less than 13 inches diagonally.”
Apple has just updated its Supplier Responsibility page to say that it is performing a “fact-finding visit” to Bangka Island, Indonesia to investigate whether or not its suppliers are sourcing tin from illegal mines (via The Verge). In an effort to “better understand the situation,” the company says that it has funded a new environmental task force to send to the area.
Bangka Island, Indonesia, is one of the world’s principal tin-producing regions. Recent concerns about the illegal mining of tin from this region prompted Apple to lead a fact-finding visit to learn more. Using the information we’ve gathered, Apple initiated an EICC working group focused on this issue, and we are helping to fund a new study on mining in the region so we can better understand the situation.
Apple currently has 249 suppliers using tin in components of its products, more than any other metal. Samsung has already admitted to using tin from Bangka Island, saying that some of the tin for its products “originates from the area,” but it’s not directly sourcing it.
Friends of the Earth has been calling for Apple to come clean on whether or not it uses tin from the Bangka area for a long time, amassing over 24,000 signatures on its campaign. The activists say that the tin has been “linked to the destruction of tropical forests, coral reefs and fishermen’s livelihoods.”
White says, “we believe fingerprint identification technology will be part of the iPhone 5S and this is likely to be the major new feature used to market the iPhone 5S, similar to what Siri was to the iPhone 4S.”
I know… It’s a rumor that we’ve heard many times before, but now another analyst that often has accurate information is saying that same fingerprint tech could be the source of delays for the next-gen iPhone.
KGI Securities analyst Ming-Chi Kuo has changed his previous predictions regarding product launches for iPhone, iPad, iPod citing a number of challenges with suppliers and the development of new features including the implementation of fingerprint technology in iPhone (via MacRumors):
Earlier we estimated that shipments of the new iPhone would begin in July (FDD version) and September (TDD version), while iPad mini 2 would hit the market in August. Currently, market consensus for shipments of iPhone 5S, low-cost iPhone and iPad mini 2 is July, July, and August, respectively. But in light of publicly available information and our knowledge of technological trends, we now think all three products will begin shipments later than our previous expectation and market consensus.
While Kuo, who previously laid out his roadmap for 2013, doesn’t provide new estimates for when the devices might ship, he does say that apple is facing challenges with finding the right color coatings that work with the fingerprint sensor rumored to be included in the next iPhone, and “technical challenges” related to the manufacturing of a Retina display for a second generation iPad mini. Needlessly to say we’ll be checking back in this summer to see how accurate these analysts reports have been.
The Korea Timesclaims that Apple has excluded Samsung from development of the A7 chip expected to be used in next year’s iPhones and iPads, citing un-named Samsung parts suppliers who say that all A7 chip production will be handled by the Taiwan Semiconductor Manufacturing Company (TSMC).
The chasm between Samsung Electronics and Apple is expected to widen further as the U.S. electronics giant has excluded its Korean rival from a project to develop A7 application processors, due to be released in the first half of next year.
The paper regularly claims that Apple is abandoning Samsung as a supplier, and is regularly wrong …
KGI Securities analyst Ming-chi Kuo has suggested in a Reuters story that a 19% drop in sales by Apple supplier Foxconn may be due to disappointing demand for the iPhone … Expand Expanding Close
Hon Hai Precision Industry Co, better known by its parent company name Foxconn, posted record quarterly profits in the final quarter of last year, citing increased production and improved efficiency of iPhones and iPads, as reported by Bloomberg.
Net income rose 5.6 percent to $1.2 billion, ahead of analyst expectations, but may face more challenging times ahead … Expand Expanding Close
Last week, a report from The Wall Street Journal claimed Apple’s much rumored HDTV set is now in the “early stages of testing” with partners Hon Hai Precision and Sharp. Today, we get more details surrounding the rumored product from the Taiwan national news agency’s English language Focus Taiwan. According to the report, citing sources close to Hon Hai Precision Industry Co., the supplier is testing Apple television designs, but the possibility of the product shipping in 2013 is “unlikely”:
Nevertheless, the source said it is unlikely that shipments of the appliances will begin as soon as the end of next year.
While the report from WSJ claimed Sharp was involved in the initial testing of the product with Hon Hai, Focus Taiwan’s source claimed the possibility of Sharp displaying panels for the product is “not high”:
Asked whether the new Apple TV will use display panels produced by Japan’s Sharp Corp., the source said the possibility is not high.
The source also claimed that Apple is looking at displays ranging from 46 inches to 55 inches, meaning the company likely wouldn’t rely on Sharp’s plants best suited for production of 60+ inch panels: Expand Expanding Close
Going deep into our supply chain, we now follow weekly supplier data for over 1,000,000 workers. In November 88 percent of workweeks were less than the 60-hour maximum specified in Apple’s code of conduct. In limited peak periods, we allow work beyond the 60 hour limit for those employees that volunteer to do so.
Following the release of Apple’s “2012 Supplier Responsibility Report,” Apple announced it would be the first technology company admitted to the Fair Labor Association. The FLA will “independently assess facilities in Apple’s supply chain,” and then publish its independent findings online. Apple announced through a press release today that the first audits have officially started with FLA President Auret van Heerden and his team beginning inspections at Foxconn City in Shenzhen. Apple CEO Tim Cook said the audits are “unprecedented in the electronics industry”: Expand Expanding Close
Apple just posted its 2012 Supplier Responsibility Report highlighting its efforts to audit and improve working conditions within its supply chain. As part of the report, Apple also posted a list of 156 companies currently supplying components for Apple products that make up over 97 percent of all “procurement expenditures for materials, manufacturing, and assembly” of its entire product line globally.
The list includes Toshiba Mobile display, which is —as far as we know—currently not supplying displays for Apple. There were rumors in May that claimed Toshiba was working on a 4-inch retina display and rumors last month that Apple and Toshiba are building a plant for display production, which were later debunked by the increasingly unreliable DigiTimes. It also includes Sharp, who was recently rumored to be ruled out of iPad 3-panel production due to quality concerns but also supplies other components to Apple. The full list is available after the break.
In 2011, we conducted 229 audits throughout our supply chain — an 80 percent increase over 2010 — including more than 100 first-time audits. We continue to expand our program to reach deeper into our supply base, and this year we added more detailed and specialized audits that focus on safety and the environment.
Every year Apple audits suppliers in eight areas including: Anti-discrimination, Fair treatment, Prevention of involuntary labor, Prevention of underage labor, Juvenile worker protections, Working hours, Wages and benefits, and Freedom of association. The overall results can be seen in the graphic below. We also learned than Apple found 42 facilities delayed wages, 68 facilities did not provide proper benefits, and 67 facilities held back payments as punishment.
There were also 108 facilities failing to pay legal requirements for overtime and holiday pay, and 5 facilities with 6 active cases of underage labor, to which Apple is requiring the suppliers “support the young workers’ return to school and to improve its management systems.”
In the audits, Apple found 93 facilities currently have more than 50 percent of its staff exceeding the maximum 60 hour workweek (with one day of rest per 7 days) set by Apple’s Code of Conduct for suppliers: Expand Expanding Close
Digitimes claimed back in May that Largan Precision could become the main supplier of eight-megapixel lens modules for Apple’s upcoming iPhone 5. Now a report today from Taiwan Economic News claims that not only Largan Precision Co., Ltd., but also Genius Electronic Optical Co., Ltd will both be supplying Apple for their next-gen iPhone with orders expected to be placed soon.
“The two companies are reported to continue supplying lenses for Apple’s newest iPhone 5 with an 8-megapixel camera. With relatively higher production yield, Largan, commanding nearly 20% of the global market, will reportedly garner a big order from Apple.”
Brian White, Topeka Capital’s Apple analyst that previously 
