Samsung has warned today that there is a “serious imbalance” in semiconductors globally and a chip shortage could delay the launch of its Note flagship. Analysts also point out that this shortage is affecting almost everyone except Apple.
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This past spring, Apple was implicated along with other US brands like Nike, Dell, and more for having its supply chain allegedly involved with forced labor of the Muslim Uyghurs in Chinese factories. Now a new report from The Information says that Apple has paid to lobby Congress around legislation having to do US companies that could have connections with slave labor in China.
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Apple has released its 2016 supplier responsibility progress report including a new letter from recently named COO Jeff Williams detailing Apple’s commitment to the people who create its products.
As if Apple’s management wasn’t under enough pressure from the stock falling below $100 yesterday, two firms of analysts have said that the company was either over-optimistic in its iPhone sales expectations or has even been guilty of “deliberately overstating underlying trends.”
Business Insider quotes excerpts from investor notes from Pacific Crest and UBS, each suggesting that Apple has over-estimated iPhone demand. Both point to apparent contradictions between Apple’s predictions of continued growth and supply-chain reports of reduced orders.
UBS says that it believes Apple has been taken by surprise with the relatively low numbers of people upgrading from older iPhones.
We think the most likely reason for a shortfall is that the upgrader portion of unit demand has stalled significantly in recent months and is failing to meet Apple’s own expectations.
The note from Pacific Crest goes much further.
Management’s confidence now looks highly likely to be misplaced, which suggests that it was either ignorant of the challenges it faced or deliberately overstating underlying trends. The former seems unlikely, which suggests that management has taken a much more aggressive tone as growth in the high-end smartphone market has slowed. This reduces our confidence in Apple’s commentary going forward.
Business Insider notes that the Wall Street consensus is for significant year-on-year fall in the current quarter, ranging from Stifel, Aaron Rakers and team forecasting an 8% drop in sales through to Pacific Crest at 18%. Even noted Apple bull Katy Huberty at Morgan Stanley is predicting a 15% fall this quarter.
As we noted earlier, Apple’s guidance for the current quarter will be issued when it reports its holiday quarter numbers on January 26th.
Photo: wallpapersfine.com
In a radio interview on the syndicated show Conversations on Health Care, Apple COO Jeff Williams said that the reason Apple has come under attack for the use of child labor in its supply chain is that the company actively goes out looking for it. Other companies, he said, simply keep their heads down.
No company wants to talk about child labor. They don’t want to be associated with that. We shine a light on it. We go out and search for cases where an underage worker is found in a factory somewhere and then we take drastic actions with the supplier and the labor groups to try and make a change.
Then we report it publicly every year. We take a lot of heat for that. But we think the only way to make change is to go hit it head-on and talk about it.
Apple has come under fire over the years when underage workers were found in the company’s supply chain, and Williams has spoken before about Apple’s unusual stance on these issues …
[Update 2: Reuters reports that Foxconn has published an earnings report showing a 20% fall in December revenues. However, the company says that its December earnings were “as expected,” and its full-year earnings are up 6.42% on the previous year, only marginally short of analyst expectations of 7%.]
[Update 1: StreetInsider reports that Foxconn has denied reports that workers started their lunar new year holiday early, and says that the government payout relates to ‘an insurance premium,’ but makes no reference to any response to the claim that it has been laying off workers.]
The WSJ is today suggesting that Apple is scaling back iPhone orders, noting that iPhone manufacturer Foxconn has been laying off workers and has received a $12.6M subsidy from the Chinese government through a program designed to minimize unemployment.
The piece notes that the subsidy is for Foxconn’s Zhengzhou plant, which is mostly devoted to iPhone production, and says that Apple has also reduced order forecasts for iPhone component makers.
Chinese iPhone factories had some idle capacity in the final two months of the calendar year, when they would typically be racing to chongliang, or “rush quantity,” for Apple, in factory-speak. Some workers at Foxconn’s Zhengzhou factory in inland China were let go on early holiday last month, one of the people involved in the supply said, although the typical new-year holiday season doesn’t start until February.
China Labor Watch says that an undercover investigation at a Pegatron factory manufacturing iPhones and iPads found that 58% of workers there were working in excess of 60 hours a week – the limit laid down by Apple for its suppliers. It also said that overtime, which is supposed to be voluntary, is effectively mandatory, reports CNET.
The report claimed that the standard shift was nine hours, but that – between September and December last year – staff worked an additional minimum of 20 hours of overtime each week, usually split up between an extra two hours each week day and one 10-hour shift on Saturdays. […] This overtime was essentially a requirement, according to the investigator, who claimed to be told by a trainer that working eight-hour shifts five days a week “does not conform to our hiring requirements.”
The report says that many workers in any case said that significant overtime was necessary to meet their living expenses, with wages at the local minimum wage of around $1.85 per hour.
The report also alleges that Pegatron falsifies documents shown to Apple to give the appearance of complying with supplier audit requirements while failing to do so in reality.
Despite providing only about eight hours of pre-job safety training—where Chinese law requires 24 hours—Pegatron forces each new worker to sign a form that “certifies” that she has undergone 20 hours of safety training. A worker also must sign a trainer’s name on the form. The factory has workers quickly copy answers to the safety information quiz. These falsified forms are the types of documentation that are provided to Apple in their audits.
The report notes some improvements since 2013, with partial improvements in sick leave and the ending of claimed discriminatory hiring practices. CNET says that neither Apple nor Pegatron responded to requests for comments on the report.
It’s not the first time that China Labor Watch has criticized working conditions in factories run by Apple’s suppliers. A report last year on another Apple supplier detailed claims of 22 violations ranging from hiring practices to safety concerns.
A BBC documentary based on an undercover investigation at another Pegatron factory prompted Tim Cook to say he was “deeply offended” by the claims and the show’s failure to include facts and perspectives provided by Apple.
Apple publishes an annual Supplier Responsibility Progress Report in which it details the issues it faces in its supply chain and the steps taken to address these.
Photo: AP Photo/Kin Cheung
Engadget Japan has shown a purported schematic of the iPhone 6S which it attributes to a reliable source in the Chinese supply chain. While the diagram does not appear to have originated from Apple, the design and marked dimensions are consistent with casing photos we obtained from a proven source.
We noted that any change in thickness was imperceptible, and the thickness marked on the schematic is 7.1mm – just 0.2mm thicker than the iPhone 6, and the exact same thickness as the iPhone 6 Plus. This also matches (within 0.03mm) that shown in a drawing we reported earlier …
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Will the first generation Apple Watch become collectible? Or will your shiny new Apple Watch go the way of old iPhones and iPads in a year or two when the upgrade to a newer, likely more feature-filled model proves too hard to resist?
If Apple follows the release cycles of its other products, the Apple Watch could see at least a minor refresh every year and perhaps even a larger overhaul every other year, much like we see with Apple’s iPhones and iPads.
What might Apple’s second and third-generation Apple Watch collections look like? And what will that mean for owners of the current collection?
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Digitimes is claiming that the long-expected 12-inch MacBook Air will be entering mass-production in the first quarter of 2015 “following a pilot production at the end of 2014.”
It should be noted this is the same source that predicted the machine would be launched in October, claiming at the time that shipments had already begun. Digitimes bases its latest claim on “upstream supply chain” sources – in other words, suppliers to suppliers to Apple. This does not aid its credibility …
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A screengrab from the documentary showing workers sleeping on the production-line
The full BBC documentary on working conditions in iPhone factories has been unofficially uploaded to YouTube. It probably won’t be too long before it gets pulled, so if you want to see it, watch it while you can – we’ve embedded the full video below …
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In a letter to UK staff, Tim Cook is said to have been “deeply offended” by allegations made in a BBC undercover documentary that Apple had broken promises over the working conditions in Pegatron’s iPhone factories in China, reports the Telegraph.
In an email to around 5,000 staff across the UK, Apple senior vice president of operations Jeff Williams said both himself and the chief executive were “deeply offended by the suggestion that Apple would break a promise to the workers in our supply chain or mislead our customers in any way”.
“Panorama’s report implied that Apple isn’t improving working conditions,” he continued. “Let me tell you, nothing could be further from the truth.”
Williams said that Apple had provided both “facts and perspective” on the allegations, but the BBC had chosen not to include these in the program …
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Ahead of a BBC special exploring work conditions in Apple’s supply chain airing tonight (update: video embedded below), BBC.com today published a story revealing the results of its investigation. The news outlet went undercover into Apple’s supply chain and claims “Apple’s promises to protect workers were routinely broken” while citing a number of workplace violations:
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Apple has yet to provide a specific launch date for the Apple Watch, leaving its early 2015 timeframe and internal memo revealing a spring launch after Chinese New Year as the only information to go by in terms of a release date. A new report by Taiwan-based DigiTimes, however, suggests that the Apple Watch could launch sooner rather than later next year.
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The latest report from KGI analyst Ming-Chi Kuo claims Apple will delay its expected launch of a 12.9 (or 12.2)-inch iPad ‘Pro’ as it predicts a 50% decline for iPad shipments heading into next year. Specifically, KGI thinks Apple will sell just under 10 million units in Q1 2015 following a busy holiday season in the last quarter of this year. That would be a 54.5% drop from quarter to quarter with KGI predicting 21 million iPad units sold during the Q4 2014 Holiday quarter:
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Following news this week that Apple had reached at a settlement with bankrupt sapphire manufacturer GT Advanced, today the company has responded to the situation in a comment to Recode. While GT previously said it would wind down sapphire production operations at its Mesa, Arizona plant and sell furnaces to repay the $439M owed to Apple, today Apple hinted it might have its own plans for the facility.
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Apple’s clean-break settlement with GT Advanced is now official, two days after lawyers for the bankrupt sapphire manufacturer reported that agreement had been reached. In a press release, the company said that the company was being given up to four years interest-free to repay the $439M owed to Apple.
GT will be released from all exclusivity obligations under its various agreements with Apple. GT will retain ownership of all production, ancillary and inventory assets located in Mesa and Apple is provided with a mechanism for recovering its $439 million pre-payment made to GT over a period of up to four years without interest, solely from a portion of the proceeds from ASF® sales. The agreement provides for a mutual release of any and all claims by both parties. As a result of the agreed upon terms, GT retains control of its intellectual property and will be able to sell its sapphire growth and fabrication technology, including ASF and Hyperion™, without restrictions.
The company is exiting the sapphire production business and will repay Apple from the proceeds of selling its furnaces, the four-year timeframe likely agreed in order to allow GT Advanced to achieve the best price.
GTAT said that it will continue “technical exchange” with Apple to help develop future production processes, but will limit its future involvement in sapphire to making production equipment for other companies.
Apple has already previewed the Apple Watch at this month’s iPhone event and the unreleased wearable is currently on display in Paris’s Collette, but Apple hasn’t shared specific availability details for the Apple Watch beyond saying ‘early 2015’. A rumor from the Asian supply chain shared by Apple Daily (via GforGames) claims Quanta Computer out of Taiwan will kick off mass production for the Watch for Apple in January 2015…
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As we shared this morning, Apple CEO Tim Cook today participated in the Climate Week NYC environment-focused conference to speak on behalf of Apple and the company’s efforts on preserving the planet. During his interview, Cook stated that Apple’s new headquarters will be what he thinks is the greenest building on the planet:
“We’re building a new headquarters that will, I think, be the greenest building on the planet. It’ll be a center for innovation, and it’s something clearly our employees want and we want.
Cook’s comments came in the context of discussing Apple’s efforts to monitor the environmental impact of the supply chain behind Apple’s products, not just Apple-operated facilities and improving the carbon footprint of other facilities. Cook echoed past comments by saying that Apple will focus on the supply chain “in a major way.”
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Apple has implemented improved reservation procedures and policies for employees dealing with the iPhone 6 launch today at retail stores, but the launch at the company’s Hong Kong store hasn’t gone quite as smooth as elsewhere. The store was hit by protesters from the Students and Scholars Against Corporate Misbehavior (SACOM) and also required police to help disperse customers that had waited in line without reservations.
SACOM protested outside Apple’s Hong Kong stores with the banner pictured above reading, “iSlave, Harsher than Harsher, Still made in sweatshops.” To go along with the protest today, SACOM has also published a new report titled “The Lives of iSlaves” that reveals recent findings from an almost 1-year long investigation of three factories run by Apple’s manufacturing partner Pegatron. SACOM says its key findings include various infractions related to labor laws at the facilities:
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DigiTimes is citing supply-chain sources as stating that Apple is gearing-up its iPhone 6 production plans for an anticipated 80 million sales by year-end. If achieved, it would represent 33 percent year-on-year growth.
Makers in the iPhone supply chain are preparing parts and components for production of up to 80 million units of iPhone 6 and iPhone 6 Plus before year-end 2014, according to sources at Taiwan-based iPhone supply chain.
As ever with DigiTimes, the number should be taken with a large dose of salt: while manufacturers will be aware of their own order-books from Apple, and thus have some degree of insight into the company’s expectations for early sales, it’s a stretch to extrapolate from that to sales targets up to the end of the year.
We won’t have too long to wait for a good indication of how well the new models are selling. They go on sale on Friday 19th, and Apple is expected to issue its usual announcement of opening weekend sales on Monday 22nd September. Last year, Apple announced a record 9M iPhone sales in the first three days.
This year’s opening weekend numbers may take a hit, however, with the New York Times reporting that regulatory problems may mean the new models won’t go on sale in China – a massive market – on 19th September.
Via Business Insider
[youtube=https://www.youtube.com/watch?v=YHsXH6CO8Tg]
After showing more journalists around its solar-powered North Carolina data center (where it is building a third solar farm), Apple says that its new focus for renewable energy is its supply chain. The Guardian reports that the sapphire factory in Arizona forms part of this initiative.
The company is also moving to install solar and geothermal power at a plant in Mesa, Arizona that has been manufacturing sapphire glass. Apple would not directly comment on the Arizona factory but the state’s governor, Jan Brewer, has publicly praised the company’s decision to relocate there and to use solar and geothermal in manufacturing.
Apple’s VP of environmental initiatives Lisa Jackson said that the company is conscious that its supply chain cannot claim the same green credentials as Apple itself …
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Supply-chain rumors are can be unreliable sources at the best of times, but never more so than when they claim to offer insight into Apple’s strategic plans. DigiTimes is claiming that Apple will be launching the 4.7- and 5.5-inch models of the iPhone 6 separately “to avoid competition between the two models.”
The different timetables have been set as Apple does not want to repeat the mistake it made in 2013 when it launched the iPhone 5s and iPhone 5c simultaneously, said the sources.
Let’s take this one step at a time. First, what companies in the supply-chain know are how many orders have been placed with them for specific components. They don’t know what orders Apple may have placed with other suppliers for the same components, and they don’t even necessarily know in which product the parts will be used …
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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.
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