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Chinese readers respond to story of Apple's Chinese suppliers
The financial world's eyes are on Apple this week after it announced record-breaking quarterly earnings. In the midst of all this commentary and congratulations, there was also a sobering article by New York Times reporters Charles Duhigg and David Barboza. Titled "In China, Human Costs Are Built Into an iPad," the story was critical of Apple's relationship with its overseas manufacturing partners. The piece details the purported harsh working conditions found in the factories of the contract companies that build Apple products. The 7-page article claims Apple puts incredible pressure on its partners to produce a large volume of components in a short amount of time and for little profit. This incredible pressure forces companies like Foxconn and Wintek to cut corners and risk the safety of their workers to meet Apple's demands. Apple supposedly turns a blind eye to these practices and will even cut money to companies that complain. The article ends with a statement that implicates Apple fans in this scandal by saying "And right now, customers care more about a new iPhone than working conditions in China." This report was reprinted in the Chinese business magazine, Caixin, and elicited equally emotional responses by the Chinese who both support and condemn Apple. Here are a few samples of the comments left on the Chinese report, If people saw what kind of life workers lived before they found a job at Foxconn, they would come to an opposite conclusion of this story: that Apple is such a philanthropist. - Zhengchu1982 Apple has gained so much sales revenues from China. Do you think the company really cares about the conditions of those workers? I think they are just proud of having an Apple product. - 李凌云-深圳 1.) It is a pity that, we know that for Apple fans, such a story won't stop their enthusiasm. Just like people are still buying Nike and Adidas shoes, knowing that shoe manufacturing is highly environmentally hazardous; 2.) if a government cannot guarantee the welfare of its own 120 million disadvantaged population and even suppresses their appeals, then how could we require an overseas company to protect the labor rights in a Chinese factory? - Jionglegejiong When the explosion happened, I was working for media in Chengdu. Domestic media were all silenced and only allowed to use the (Xinhua) official report, because that (Foxconn factory) was a key project. Compare to what The New York Times wrote, the gap really saddened my heart. - Chen Qiye Without Apple, Chinese workers will be worse off. I hope China can some day soon have dozens of its own companies like Apple, who (only) work on high-end research and development and send manufacturing lines to Africa. - Anonymous In the end, there's no easy answer to this problem. Apple tries to be transparent and releases an annual report that details its progress in improving supplier working conditions. Apple can pressure its suppliers to conform to its standards, but it has no control over regulation in a foreign country. Is Apple doing enough, or does it need to do more to ensure the safety of workers at other companies? Right now, the best thing we can do is bring this problem to light and get people (and companies) talking about it. [Via AppleInsider]
Apple Stores construction suppliers
Apple recently released its Supplier Responsibility Progress Report for 2012 and, for the first time, provided a list of 156 suppliers. This list covers 97% of the companies that supply Apple with materials, manufacturing and assembly of its products. Now that we know which companies are behind Apple's hardware, the folks at ifoAppleStore compiled a list of manufacturers that build Apple's retail stores. The list contains 141 companies including household names like Benjamin Moore and little known names like BGT Bischoff. Just like it does with its line of mobile devices and computers, Apple pays attention to even the smallest design details. ifoAppleStore's research suggests Apple seeks out little-known companies to supply distinct building materials for its retail stores. Not only does Apple use unique items, the company supposedly designs its stores to be consistent across the chain. The same door knob you see in the Boston store will be present in the San Francisco store, too. If you're curious about which company provides Apple with coat hooks, head over to ifoAppleStore for its list of retail store suppliers.
Apple, China groups meet to discuss environmental concerns
Environmental concerns continue to plague Apple and its suppliers in China. Earlier this year, Apple was singled out in an environmental report called "The Other Side of Apple," which detailed health, environment and safety issues at Chinese manufacturing facilities. Apple met with some of its green critics over the summer, but its practices are still under fire. Apple reportedly met this week again with nine representatives from five Chinese environmental groups to discuss pollution from its suppliers. Apple supposedly admitted that some of its suppliers were accused of excessive pollution, but put the blame on the offending companies and not Apple itself. According to Li Li, the director of EnviroFriends, Apple said "it had already spoken to 11 supply firms and asked them to reform, and they're in the process of initiating communications with the other four." Despite this effort, Li believed Apple was not sincere in its efforts to curb pollution. Not everyone was negative towards Apple's response, though. Notable Chinese environmentalist Ma Jun said Apple's efforts were "a major step forward." Apple has not commented on this latest meeting, but did issue a statement to the Wall Street Journal through Spokesperson Carolyn Wu. Apple reiterated what it has said in the past, "Apple is committed to driving the highest standards of social responsibility throughout our supply chain. We require that our suppliers provide safe working conditions, treat workers with dignity and respect, and use environmentally responsible manufacturing processes wherever Apple products are made."
Apple reportedly cuts orders for iPad parts
Apple supposedly cut its fourth quarter orders for iPad components by 25%, according to a report from Bloomberg. This adjustment may have a financial effect on suppliers and manufacturers like Foxconn, but may not hurt Apple. Some analysts, like Mark Moskowitz of JPMorgan, are not adjusting their outlook and still expect Apple to sell 10 to 12 million iPad units in the last two quarters of 2011. Before customers begin to panic about reduced inventory and product shortages, some analysts believe this reduction was part of Apple's strategy to compete with other tablet manufacturers. In this scenario, Apple ordered high and locked up suppliers and manufacturers so their competitors would be at a disadvantage. Now that this quarter is approaching, the Cupertino company is adjusting its orders down to a lower level. Other analysts believe Apple is responding to weakening demand for the iPad and global economic conditions. Analyst Wanli Wang of RBS Asia Ltd., says, "It's back to reality. Now it seems even for Apple, due to the market situation, we need to be conservative." It's also possible Apple is cutting production in advance of the iPad 3 launch early next year. It may also be shifting some of its manufacturing to Brazil.
LG solves iPad display quality issue, shipments resume
Display manufacturer LG was reportedly struggling to meet production targets for Apple's iPad 2 LCD due to quality issues (particularly a "light leak" issue noted in early models). According to a report from DigiTimes, LG has solved those issues and is back to cranking out displays for Apple as fast as it can make them. LG reportedly built 4 million displays for the iPad 2 in August, and it's expected to build another 4 million this month. Considering that iPads don't usually hang around on shelves for too long, the implications for Apple's quarterly iPad sales are pretty staggering. If Apple is really selling 4 million of these things every month, that puts the iPad on a very rapid track to being the best-selling consumer electronics device of all time. According to DigiTimes's source, "Apple's iPad 2 shipments are expected to reach 12-15 million units in third-quarter 2011, which will benefit its suppliers." No doubt it will be a benefit to Apple too.
Apple hires two camera suppliers for the iPhone 5
Apple has tapped both Largan Precision and Genius Electronic Optical to supply some lenses/camera modules for the rumored upcoming iPhone 5, according to the Taiwan Economic News. Both of the companies have worked on 5 megapixel camera modules that you can now find in the iPhone 4, so it's not too surprising that Apple has gone back to those same sources for what are supposed to be 8 megapixel kits in the next version. And while that seems like good news for Apple, it's also obviously good news for these two companies, who have both earned a 27.5 percent global market share together. If they are contracted for the next iPhone, that share will likely go even higher. Post corrected to clarify that lenses themselves do not carry a megapixel rating.
Retina Display-equipped iPad 3 looking more and more likely for early 2012
Well, the Wall Street Journal's headline certainly isn't going to surprise you -- Apple Developing New iPad -- that has been a safe assumption since the iPad 2 was announced. Rumors are circulating though (some, for quite a while) that are painting an increasingly convincing picture of a Retina Display-equipped slate shipping in early 2012. Reports are in that suppliers have already received Q4 orders for parts that may eventually find their way into Apple's next tablet. Can we say for certain that the iPad 3 will hit shelves in Q1 of next year sporting a 2048 x 1536 screen? No, but it's starting to look more and more likely.
Parts suppliers reportedly prep for iPhone 5, iPad 3 assembly
Digitimes is reporting that the suppliers for the iPhone 5 and iPad 3 are gearing up to provide components for the next iterations of both of those devices. That in and of itself isn't really surprising -- of course Apple is working on new iterations of all of its devices. But what is interesting about this little leak is the timing. We first heard that Apple was lining up suppliers for the iPad 2 back in November of last year, which the benefit of hindsight now tells us was just about four months before its eventual release in early March of 2011. In other words, hearing about the iPad 3 suppliers starting to turn the gears now could mean, assuming that Apple is still on the same manufacturing schedule, that we're going to see another new iPad as soon as four months from now -- sometime before this coming holiday season. Would Apple release two iPads in one year? Blogger John Gruber has already suggested that they'll do exactly that, and certainly the timing of this leaked announcement supports that idea. As usual, nothing is confirmed until we hear it from Cupertino officially. But you can at least add another log to the fire of rumors that we may see the iPad 3 before 2011 has left us behind.
iPhone 5 may feature curved glass screen, continue iPod nano legacy
DigiTimes has been canvassing its manufacturing industry sources again, and today it's managed to extract some intel regarding Apple's typically secretive supply chain. Steve Jobs' team are said to have purchased between 200 and 300 glass-cutting machines, specifically in order to use them to slice up curved glass display covers for the iPhone 5. This move has apparently been in an effort to accelerate production, with glass makers reportedly showing a reluctance to buy the machinery themselves due to its prohibitive cost. Lest you think this sense of urgency might accelerate the iPhone 5 from its earlier-rumored September launch, DigiTimes also reports that yields of curved glass are not yet good enough to start using said fancy machines. So the iPhone may be headed for the same curvacious look as we've already seen on Dell's Venue and HTC's Sensation (or maybe even the concavity of the Nexus S), but as is Apple's wont, it looks like that will be done with a tailor-made, custom solution. At least those Cupertino designers have a couple of generations of curved iPod nano screens under their belt, giving them a good idea of how to handle the atypical glass frontage. Now if we could just have a good idea of when this phone will actually be on sale...
Suppliers ramp up to support iPad 2 demand
With queues still forming at 4 AM at some Apple stores, and whole countries selling out completely, demand for the iPad 2 is so high that Apple suppliers are ramping up production of its various components. AppleInsider reports that Samsung is hiring 300 new engineers for a semiconductor plant in Austin, Texas, and AU Optronics has an order to make flat panel screens (although this has not yet been confirmed). With earlier stories about other suppliers being taken on to make Apple's A5 processor and touch sensors, it does seem as if Apple is indeed ramping up production. Analyst Charlie Wolf with Needham & Company predicts Apple will make 30 million iPads this year and 40 million in 2012. Samsung alone will make something like US$7.8 billion worth of components for Apple next year, and others are looking for a share of Apple's business. With a new iPhone model expected later this year, this doesn't look like a process that's going to slow down any time soon.
Former Apple employee convicted of money laundering, wire fraud
Former Apple employee Paul Devine pleaded guilty to 23 charges of wire fraud, conspiracy and money laundering following his arrest last August. Devine, a global supply manager, was accused of accepting kickbacks from six Asian suppliers. In return for cash and gifts, he supplied these suppliers with confidential information that gave them an advantage when negotiating lucrative contracts with Apple. Devine allegedly collected over US$1 million in this kickback scheme and deposited the money in various foreign and US banks using accounts setup in his name and his wife's name. Varying amounts of cash were also stored in safety deposit boxes and hidden in shoe boxes in his house. His activities reportedly cost Apple more than $2.4 million in losses. Devine is currently on pretrial release and will return to court on June 6 for his sentencing. He faces up to 20 years in prison for the wire fraud and money laundering charges. He also agreed to forfeit $2.28 million in cash and gifts worth $10,000, most of which were obtained as part of his elaborate kickback scheme. When the criminal trial ends, Devine still faces a civil trial filed by Apple.
Apple reportedly reduces iPad 2 production volume target
WIth an announcement of a second-generation iPad just around the corner, Digitimes is reporting that Apple's volume targets for the new device have been set lower. While both Apple and iPad manufacturer Foxconn are mum on the subject, Digitimes stated that the forecasted manufacturing run for the iPad 2 for the period ending March 31 is now set at about 300,000 - 400,000 units compared to earlier estimates that were in the range of 400,000 - 600,000 units. Some earlier rumors expressed concern over the ability of display suppliers to achieve the yield goals set by Apple, but Digitimes reports that since the company has three manufacturers to back up the supply of touch screen displays, that is not likely to cause delays in the shipment of the iPad 2. Digitimes also noted that most upstream component suppliers (the manufacturers of components used by Foxconn to assemble the iPad) have not received word of a reduction in the iPad production volume target, and that Apple has been reducing the production of the original iPad in anticipation of the newer model being produced. Should Apple's suppliers not be able to meet the production goals, there could be shortages of the new iPad 2 in the short run.
Wintek workers still experience effects from n-hexane exposure, Apple issues a report
It's been a few months since we checked in on the workers at Wintek, where they manufacture touchscreens for the likes of Apple. As you might remember, the former company was facing a lawsuit for chemical poisoning that occurred between May 2008 to August 2009 when the company substituted alcohol for n-hexane in the manufacturing process. Both Apple and Wintek maintain that ultimately a total of 137 people had been hospitalized, and all have recovered -- but as Reuters points out, daily exposure to the chemical has been known to cause "long-term and possibly irreversible nerve damage," and Wintek employees have maintained that the company has left them holding the bag for symptoms that could very well flare up again in the future (or, in some cases, never really went away). "We are unable to cope with the medical costs of treatment in the future," said Guo Ruiqiang, a worker at the plant. "We can only stay in the factory and see what happens. We just feel very helpless now." For Apple's part, the company has mandated that Wintek "work with a consultant to improve their Environmental Health and Safety processes and management systems" in anticipation of a complete reaudit of the facility in 2011. [Warning: PDF More Coverage link]
Rumor: iPhone 5 to land in September
In a research note, analyst Craig Berger of FBR Capital markets makes the bold claim that the iPhone 5 will not launch until September, a timing that overlaps with Apple's annual iPod refresh. Berger writes, "we think a September launch is more likely, off from Apple's traditional iPhone launch schedule, but giving the firm more time to enhance its next-generation instant communications on the phone." To back up this claim, Berger cites reports from Asian parts suppliers that are still ramping up their production of casings and touch panels for the iPhone 5. According to Berger, some chip vendors still have not received orders from Apple, and other component suppliers, such as those for the image sensor, have not been determined. Combined, these various reports paint a picture of a device that may not be ready for a large volume launch within four to five months. Keep in mind that this information is based upon one analyst's interpretation of information obtained from his market sources. While analysts are sometimes correct with their predictions, they are often wrong. A survey of earnings predictions shows that independent financial bloggers are often better than professional analysts at predicting Apple's quarterly financial earnings. To further cast doubt on this September launch, the Loop chimed in with its rebuttal that claims this rumor and the iPad rumor from earlier today are false. The take home message here is to regard this report with a grain of salt and assume the June iPhone 5 launch is a go until we receive additional evidence that suggests otherwise.
Apple issues report on supplier workplace audits and standards
Over the past several years, reports about alleged mistreatment of contract workers building Apple devices at plants throughout Asia have been rampant. Apple has not taken these reports lightly, and today the company issued a new report on supplier responsibility that outlines the efforts that have been made to make life better for the people who make our shiny toys. According to the report (link to PDF), Apple conducted 127 workplace audits in 2010 -- 97 at locations that had not been previously visited, and 30 repeat audits. In the report, Apple refers to the corporate Supplier Code of Conduct, a comprehensive set of standards which suppliers must meet in order to continue doing work with Apple. The Code of Conduct covers labor and human rights, health and safety, the environment, ethics and management commitment. Apple lists some of the dismal scores achieved by suppliers, showing a lot of transparency to the company's stockholders and the public. To bring up audit scores, the company has trained over 300,000 workers on occupational health and safety, worker rights and local labor laws in the past two years, and has trained more than 6,000 supervisor and managers on their responsibilities to workers. The report also covers Apple's attempts to get away from use of conflict minerals in production, as well as a detailed section on how Apple COO (and acting CEO) Tim Cook and a group of executives met with Foxconn CEO Terry Gou and his staff in June of 2010 to discuss the string of worker suicides. While the report shows that Apple suppliers still have a long way to go before creating a "worker's paradise," the company is taking positive steps to improve the situation for hundreds of thousands of workers. It's an eye-opening report worth reading for anyone who buys and uses Apple products. [via CNET]
Apple's iPad strategy: Cutting off competitors, or just learning their lesson?
Falling into the "no, duh" category, Business Insider, citing a 9to5 Mac article, says that the main reason the forthcoming iPad 2 will undercut the emerging plethora of Android-powered tablets is because Apple has already cornered the market on manufacturers and has enlisted more to produce the tablet. The number of PCB suppliers, according to reports, has risen from three to seven. Business Insider points out that Apple did the same thing with the iPod just a few years ago, making it harder for competitors to get their hands on supplies. Apple does learn its lesson when it comes to supply and demand. It doesn't want to face a chronic shortage of iPad 2 when they do come out -- not only will they have the early adopters wanting to trade up to a version with a camera, but they also have the first-generation holdouts waiting for the rumored features. I'm sure that Steve Jobs was not happy with the length of time it took new users to even get their hands on an iPad after the initial run, not to mention a basic case and the iPad Camera Connection Kit. As with the iPod and iPhone, the company has learned to anticipate demand. There will also be companies out there willing to produce parts for Android-powered tablets, and have probably anticipated the growing demand as well. Just as Apple has learned from itself, its competitors are learning from Apple, too.
Apple responds to critics of Chinese working conditions
Apple has reiterated company policy regarding the use of Chinese component suppliers and said it is "committed to ensuring the highest standards of social responsibility throughout our supply base," according to Apple spokeswoman Carolyn Wu quoted in Macworld today. The company says it requires all suppliers to agree to Apple's code of conduct before any contracts are signed. Apple didn't comment directly on the report released yesterday by The Institute of Public and Environmental Affairs (IPE) critical of Apple's oversight of suppliers. In what it calls a Supplier Report (PDF), Apple has detailed the steps it takes to maintain compliance with policies that suppliers must meet. Apple admits that its own audits showed frequent violations by overseas companies, but the audits also detail the steps Apple took to keep these violations in check. The 36 environmental groups that issued the critical report yesterday claim there is too large a gap from Apple written policies and the reality in the plants. You can download a PDF of the critical report, but note that it is in Chinese. The IPE also produced a video, also in Chinese, about the issue.
Sharp investing $1.2b in expanding smartphone LCD production, Apple fingered as the major client
Apple's practicing its self-imposed rule of supplier polygamy this week and Japan's Nikkei is telling us all about it. It started off on Monday, when we learned that Toshiba's throwing down some cash to build a new smartphone display production plant, with Apple as the key investor and subsequent consumer, and today we're hearing pretty much the same story, only with Sharp playing the role of Japanese producer to Apple's hardware whims. A "large portion" of the $1.2 billion cost -- identical to what Toshiba's said to be spending -- of expanding Sharp's Kameyama factory is expected to be shouldered by Jobs' cash-rich crew, a postulation also confirmed by Reuters, who's managed to dig up a pair of sources agreeing with the Nikkei. Our Japanese team reports that Sharp has made its expansion plans official, but obviously there's nary a peep about any Apple connection, while DigiTimes says Toshiba has outright denied any involvement with Cupertino. Guess we'll just have to wait for the iPhone 7 teardowns to find out.
iPad 2 will have rear and front-facing cameras, say multiple sources
Hey, it's December, what else are you going to do but monger rumors of the next iPad? Reuters has rounded up no less than four sources from within Apple's component suppliers, all expressing their belief that the hallowed tablet will be refreshed some time in early 2011. A pair of the tipsters could only go so far as to say that production at places like Wintek and Simplo is expected to ramp up in the first quarter, while the other two were more decisive in identifying the cause for the extra activity as Apple's next tablet iteration. As to the future iPad's camera or cameras, one source says it'll feature both a back-mounted and a front-facing module, with Largan and Genius identified as having received new orders from Cupertino for churning out imagers. Notably, the latter is currently also supplying the iPhone 4's photon collector and there's no confirmation that whatever they produce will inevitably land in an iPad 2, but the tea leaves seem to be in agreement: parts are targeted for a February shipment in preparation for an April iPad refresh. Whether the new slate arrives at that time, however, will be another matter altogether.
Rumor: Apple working on parts for iPad 2
Here's a fun rumor to give you something to dream about this weekend. Digitimes is reporting that Apple is on the hunt for parts for the iPad 2. The company is reportedly in the validation stage with a few suppliers for touch-based displays and reinforced glass, prepping production on a second generation iPad for a launch in early 2011. That's all we've got -- there's no details on what new features the iPad might have (although a camera would be an excellent guess) or any other way it might differ from the current model, but it looks like most of the speculation has been on target so far. There's still quite a while to wait (and honestly, I'd still recommend buying an iPad if you want one right now -- next year is still a ways away, and 4.2 will make even the "old" units seem new again), but there's almost no doubt another iPad is going to happen next year. [via TMO]
