Apple suspends new business with iPhone supplier that used students on night shifts

Apple is putting one of its suppliers on probation for violating its labor code.

The iPhone maker said Monday that it would stop giving Pegatron, a longtime Taiwanese supplier, new business after it discovered that some student workers in China had worked nights and overtime, against Apple’s rules.

It’s not clear how many contracts Apple has right now with Pegatron, or how long any of those might last. Apple declined to comment when asked what the supplier is making for the US company. It also declined to say what type of manufacturing might be affected.

A person close to Pegatron, though, said that the company is assembling the iPhone 12 Mini. Apple’s action does not affect existing business.

Apple said it discovered several weeks ago that the labor code had been violated on Pegatron’s campuses in Shanghai and the eastern Chinese city of Kunshan.

“The individuals at Pegatron responsible for the violations went to extraordinary lengths to evade our oversight mechanisms,” Apple said in a statement. “Pegatron misclassified the student workers in their program and falsified paperwork to disguise violations of our code.”

The California company stressed that it had found no evidence of forced or underage labor. It also said that Pegatron had since fired the executive in charge of the program.

Pegatron said that it has worked to increase oversight after the violations came to light, including by arranging an external audit.

“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,” Pegatron said in a statement.

Apple, however, said that it would take steps “to strengthen our oversight mechanisms even further.”

The company pledged to not place any new orders with Pegatron “until they complete all of the corrective actions required,” without going into further detail.

Apple has long faced criticism for how workers in its supply chain are treated in China, including at Pegatron. To improve practices, the US company regularly conducts audits, including surprise visits, of its suppliers’ facilities around the world.

Pegatron’s shares closed down 2.1% in Taipei on Monday following the news.

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