Apple suspends iPhone assembler Pegatron over labor violations in China

The logo of Apple company is seen outside an Apple store in Bordeaux, France, March 22, 2019.

Regis Duvignau | Reuters

Apple said Monday it has suspended future business with Pegatron, a key partner for assembling products like iPhones and iPads, for violating its labor rules.

“Several weeks ago, we discovered Pegatron — one of Apple’s suppliers in China — violated Apple’s Supplier Code of Conduct in its administration of a student work study program,” an Apple spokesperson told CNBC.

Apple said Pegatron misclassified student workers and falsified paperwork to help disguise violations of Apple’s code of conduct. Students were allowed to work nights and/or overtime and sometimes students worked on projects unrelated to their major, Apple told CNBC. Those students were ultimately compensated for their work and were returned back to home and school, the company said.

The New York Times first reported the news on Monday.

Apple said Pegatron employees went to extraordinary lengths to evade its oversight mechanisms and that Pegatron fired the executive in charge of the program. Apple won’t give the company any additional business until it corrects parts of the business that led to the violations.

This isn’t the first time Apple’s suppliers have come under fire for the labor conditions in the factories that make up its supply chain in China. It relies on overseas manufacturers like Pegatron and Foxconn to assemble large numbers of phones quickly, but these companies have been accused of paying little and treating workers poorly.

Pegatron’s probation will not affect current production of iPhones, according to the Times. Apple’s new iPhone 12 Pro Max and iPhone 12 Mini went on sale Nov. 6 and will start shipping this Friday.   

CNBC’s Josh Lipton contributed to this report.

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