Apple Supplier Foxconn Halts Interns’ Illegal Overtime at iPhone X Factory in China

Apple supplier Foxconn says it has stopped interns from working illegal overtime at its factory in China, after reports emerged that at least six students worked eleven-hour days on iPhone X production lines.

Today's announcement follows a Financial Times report earlier this week that revealed around 3,000 students worked at its iPhone X assembly plant in Zhengzhou, as the firm struggles to catch up with demand for the smartphone after production delays.

A worker assembles iPhones in a Foxconn factory

Apple on Tuesday said an audit had confirmed "instances" of student interns working overtime at the supplier facility in Henan province, and both Apple and Foxconn said they would take remedial action to stop the practice, which breaches Chinese laws preventing children from working more than 40 hours per week.

"Apple is dedicated to ensuring everyone in our supply chain is treated with the dignity and respect they deserve," the tech giant said today in a statement given to the BBC. "We know our work is never done and we'll continue to do all we can to make a positive impact and protect workers in our supply chain."

Foxconn, which operates the intern program, told the BBC in a statement that it had taken "immediate action to ensure that no interns are carrying out any overtime work". It added that "interns represent a very small percentage" of its workforce in China and that the breach of labour laws was inconsistent with its own policies.

Foxconn is thought to hire large numbers of seasonal workers each year to assemble the latest iPhone models in time for the busy holiday shopping season. The FT report, citing an anonymous Foxconn employee, said there can be up to 300,000 workers producing up to 20,000 iPhones per day. However, this year it appears the manufacturer has found it particularly challenging to keep up with demand for the iPhone X, which Apple has described as being "off the charts".

As per its supplier responsibility efforts, Apple requires manufacturing partners like Foxconn to limit working hours to no more than 60 hours a week, with a mandatory rest day once every seven days.

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Apple Taking Action After Students Worked Overtime to Assemble iPhone X at Foxconn

Apple and its manufacturing partner Foxconn have confirmed instances of students working overtime to assemble the iPhone X, and both companies are now taking remedial action, as reported by the Financial Times.

A technician inspecting iPhone components at a factory

Apple conducted an audit and confirmed "instances of student interns working overtime at a supplier facility in China," according to the report. "We've confirmed the students worked voluntarily, were compensated and provided benefits, but they should not have been allowed to work overtime," it added.

Foxconn said that "all work was voluntary and compensated appropriately," but admitted that the interns "did work overtime in violation of our policy," which reportedly prohibits interns working more than 40 hours per week.

The statements from Apple and Foxconn come after six high school students told the Financial Times they routinely work 11-hour days assembling the iPhone X at Foxconn's factory in Zhengzhou, China.
"We are being forced by our school to work here," said Ms Yang, an 18-year-old student training to be a train attendant who declined to use her first name for fear of punishment. "The work has nothing to do with our studies." She said she assembled up to 1,200 iPhone X cameras a day.
The students, aged 17 to 19, reportedly said they were told that a three-month stint at the factory was required "work experience" that they had to complete in order to graduate from Zhengzhou Urban Rail Transit School.

Foxconn is believed to hire a significant number of seasonal workers each year to assemble the latest iPhone models in time for the busy holiday shopping season. The report, citing an anonymous Foxconn employee, said there can be up to 300,000 workers producing up to 20,000 iPhones per day.

As part of its supplier responsibility efforts, Apple requires its manufacturing partners like Foxconn to limit working hours to no more than 60 hours a week, with a mandatory rest day once every seven days.

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Apple COO Jeff Williams and Foxconn Chief Will Reportedly Meet Amid iPhone X Production Issues

Apple's operating chief Jeff Williams will reportedly meet Foxconn chairman Terry Gou later this month, following several reports about ongoing iPhone X production issues, according to Nikkei Asian Review.


While the report did not say which topics Gou and Williams will discuss, it said the two executives will presumably look at ways to deal with the manufacturing bottleneck for Apple's new high-end smartphone.

Williams will be visiting Taiwan for the 30th anniversary of TSMC, the sole supplier of the A11 Bionic chip in the latest iPhone models, the report said. A ceremony marking the celebration is scheduled for Monday.

Apple's suppliers are still struggling to perfect manufacturing of the iPhone X's TrueDepth camera and 3D facial recognition system, according to the report. KGI Securities analyst Ming-Chi Kuo highlighted the issues last month.

Multiple reports have claimed it has taken more time to assemble the TrueDepth system's so-called "Romeo" module than the "Juliet" module.

The "Romeo" module reportedly includes the dot projector that beams more than 30,000 invisible dots to create a precise depth map of your face, while the "Juliet" module includes the infrared camera that analyzes the pattern. Together, they help power new iPhone X features such as Face ID and Animoji.

Foxconn is the sole assembler of the iPhone X, while its subsidiary Sharp and LG Innotek are reportedly responsible for assembling the 3D sensor modules.

Today's report cited an industry executive who said that while the yield rate has improved, it has not yet reached a satisfactory level. The executive believes it's unlikely the yield rate will reach a level that will enable Apple's suppliers to churn out the iPhone X at their full capacity by the end of October.

Jeff Pu, an analyst with Taipei-based Yuanta Investment Consulting, recently cut his forecast of the number of iPhone X devices that will be produced this year from 40 million units to 36 million. It was the second time he has revised down his estimate, which originally totaled 45 million earlier this year.

iPhone X pre-orders begin one week from today in the United States and more than 55 other countries. The device launches November 3.

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Foxconn Plans Trio of ‘Ancillary Facilities’ to Surround Main Wisconsin LCD Plant

After an announcement in July that Foxconn will build a $10 billion LCD panel manufacturing plant in southeast Wisconsin, a new report out today states that the Apple supplier is now planning to build three "ancillary facilities" in Wisconsin as well (via Reuters).

The three buildings are planned to be opened for operation as early as 2018, two years ahead of when the main LCD facility is expected to debut in 2020. The LCD plant will be focused on large-screened panels for TV sets, and with Apple potentially interested in investing in the United States plant, some buildings on the new Foxconn campus could eventually include an assembly line for smaller displays used in iPhones, iPads, or MacBooks.


The three facilities will be much smaller than the main plant and require a combined investment of below $1 billion.
Taiwanese electronics manufacturer Foxconn on Monday said it plans to build three facilities in the U.S. state of Wisconsin for operation as early as next year, as part of a campus housing a $10 billion liquid crystal display (LCD) factory due for 2020.

Foxconn, formally Hon Hai Precision Industry Co Ltd (2317.TW), said it will begin by setting up a back-end packaging line, high-precision molding line and end-device assembly line. It may also start importing glass from Taiwan, China and Japan.
Foxconn is now awaiting a final decision on a bill that aims to grant the manufacturer a $3 billion incentive package for the Wisconsin plant, which will be met with approval or denial sometime in September. If approved, Foxconn will "immediately" begin land survey work for its new U.S. facilities.

Earlier in the summer, Foxconn chairman Terry Gou said the company was interested in the U.S. states of Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Indiana, and Texas, for potential manufacturing facilities. Gou's special assistant, Louis Woo, said in today's report that the company continues to look at other states it could expand into -- with Gou having met recently with Michigan's governor -- but no decision has been finalized.

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HomePod Supplies Limited at Launch, but Foxconn Coming on Board in 2018 to Increase Production

Inventec Appliances has been a rumored supplier for Apple's HomePod smart speaker since before the device was announced at WWDC in June, and now the manufacturer has indicated that supplies for HomePod might be limited at launch, in line with most Apple product launches (via Nikkei).

The news came from Inventec Appliances president David Ho during a press conference today. Although his comments never specifically mentioned "HomePod," the estimated time frame given for the release of the product -- late in 2017 -- and its description as a high-profile "smart home device," suggest it to be Apple's upcoming speaker. At WWDC, Apple confirmed that the HomePod would launch sometime in December.


Now, Ho has stated that the HomePod's contribution to the company's revenue for this year will be "fairly limited" -- which is expected given the device is launching so late in the year -- with optimistic improvements to profit gained from HomePod sales predicted for early 2018. One analyst speculated that the number of HomePod units shipped in December 2017 will be around 500,000.
“We will finally ship the smart home device this year, but its contribution will be fairly limited and hopefully that will improve next year,” Inventec Appliances President David Ho told analysts and reporters during an earnings conference.

“Inventec Appliances will likely only ship some 500,000 units of HomePod this year, and the device’s contribution to the group’s revenue will be less than 1%,” said Arthur Liao, an analyst at Taipei-based Fubon Securities.
In 2018, Apple will look to open up HomePod manufacturing to more than just Inventec Appliances, according to one of Nikkei's sources, who stated that Apple is planning to add Foxconn into the HomePod supply chain next year. This will result in Inventec Appliances and Foxconn receiving a "split" of HomePod orders and boosting production for the smart home speaker, following the limited initial launch.

Inventec Appliance's total smart home and connected devices shipments are expected to grow to between 70 and 75 million units by the end of 2017, but company officials didn't specifically break down the numbers related to the Apple products it makes.

In addition to HomePod, Inventec Appliances also manufactures Apple's AirPods, which have been particularly difficult for many users to purchase since the wireless earphones launched last December. Earlier in August, the estimated shipping date for AirPods finally lowered to four weeks from six weeks, which had been the shipping estimate for the previous eight months.

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Multiple Apple Suppliers Share Revenue Reports Ahead of ‘Peak’ iPhone and Apple Watch Season

A collection of Apple suppliers have shared revenue reports today, which also provide a glimpse into the upcoming "peak" iPhone and Apple Watch manufacturing season. Starting off, Foxconn looked back at its profits in July and reported consolidated revenues of NT$315.06 billion (US$10.62 billion) for the month, which marks an increase of 7.53 percent year-on-year. For the first seven months of 2017, Foxconn's combined revenues were NT$2.2 trillion, increasing by 1.64 percent year-on-year (via DigiTimes).

Those watching Foxconn's revenue report are now expecting the October-December period to be the "peak of 2017" for the company, thanks to its status as one of Apple's biggest suppliers and the launch of the iPhone 8 sometime in September. Foxconn's revenue will increase "gradually" in August, according to market watchers, and will continue until the end of the year. Holiday spending traditionally helps increase Apple and its suppliers' revenue, even boosting Foxconn's December period in 2016 in the face of an overall year that saw its first-ever profit decline.

Check out our recent hands-on with an iPhone 8 dummy model
Some market watchers expect Foxconn's revenues to increase gradually beginning August and the growth will last until the end of 2017 with the fourth quarter being the peak of 2017 for Foxconn.
Apple Watch supplier Quanta Computer announced revenues for the second quarter of 2017 at NT$235.37 billion (US$7.93 billion), growing 3.3 percent from the previous quarter and 13.3 percent from the year-ago quarter. Today's report stated that next-generation Apple Watch shipments will begin in the fourth quarter, gradually increasing Quanta's financial performance in the second half of 2017 -- a sentiment that's been shared in previous supply chain reports due to Quanta's status as the sole supplier of the "Apple Watch Series 3."
With the notebook market entering the traditional peak season, its server shipments expected to enjoy growth and the next-generation Apple Watch set to begin shipments in the fourth quarter, some market watchers expect Quanta's financial performances to gradually pick up in the second half of 2017.
In other supply chain ramp-up stories, TSMC has entered mass production on the iPhone 8's A11 chip in the third quarter of 2017. The next-generation chip is being crafted with a new 10-nanometer FinFET process, and originally began production back in May after a month-long delay. TSMC is also using its 10nm manufacturing process to build the new iPad Pro's A10X processors, and it's predicted the A11 processors will also find their way into the "iPhone 7s" and "iPhone 7s Plus."
In addition, TSMC has already started mass production of 10nm FinFET chips in the third quarter, driven by Apple's orders, the report indicated. TSMC's 10nm FinFET process has been adopted by Apple for its A10X processors for use in its 10.5- and 12.9-inch iPad Pro tablets and A11 chips that will power the upcoming iPhones.
There have been numerous reports from Apple's supply chain in recent weeks, timed ahead of the rumored announcement of the iPhone 8 in September. These include a report centered on Lumentum and "massive" orders it has received for components related to its vertical-cavity surface-emitting lasers. Such technology is believed to be for the advanced camera and 3D sensing features of the iPhone 8.

Last week, all three new iPhones were reportedly entering volume production, and Samsung Display began gearing up to operate seven of its next-generation OLED lines at full capacity earlier this month, all aimed at the iPhone 8. In terms of the main suppliers for Apple's next-generation OLED smartphone, Foxconn, Pegatron, and Wistron are predicted to hit a sales high in the period running from September to November of this year, due to shipments of finished iPhones that will "start gaining momentum" as soon as this month.

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Apple Supplier Foxconn Confirms Plans to Build TV Display Factory in Wisconsin

Apple supplier Foxconn today announced plans to invest $10 billion in the United States, which will go towards building a new factory in Wisconsin that will employ 3,000 or more workers.

Foxconn is sharing the news at an event at the White House on Wednesday afternoon, says Recode.


The upcoming factory will produce large LCD displays that are meant to be used in televisions and other similarly sized electronics, but Foxconn chairman Terry Gou has said Apple is willing to invest in the factory, so it could be expanded to smaller displays in the future.

According to the Trump administration, the factory could grow to employ as many as 13,000 workers, while also encouraging Foxconn to build additional facilities in other parts of the country.

Foxconn has been mulling a U.S. factory for several months and has been in talks with both the U.S government and several state governments. Foxconn considered several locations for the factory before settling on Wisconsin.

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Foxconn Reportedly Nearing Decision to Invest in Display Factory in Wisconsin

Taiwanese electronics manufacturer Foxconn is nearing a decision to invest in Wisconsin, and could hold an event in Washington, D.C. as soon as this week to discuss its U.S. investment plans, according to The Wall Street Journal.


Foxconn is one of Apple's primary iPhone assemblers in China, but in Wisconsin, the company is initially looking at producing display panels that can be used in large-screen electronics like televisions, according to the report.

The report, citing two people allegedly familiar with the plans, said Foxconn is also looking in the Detroit area for a possible factory.

Last month, Foxconn chairman Terry Gou confirmed that Foxconn is interested in investing at least $10 billion towards U.S. manufacturing in seven states: Ohio, Pennsylvania, Michigan, Illinois, Wisconsin, Indiana, and Texas.

Foxconn's display factory in Wisconsin will reportedly cost at least $7 billion. Gou said it could create tens of thousands of American jobs.

Earlier, Gou confirmed Apple is willing to invest in the facility, suggesting the Wisconsin plant could eventually also be used to manufacture smaller displays for products like iPhones, iPads, and MacBooks.

Foxconn has reportedly been in talks with U.S. government officials for several months over the facility, including House Speaker Paul Ryan, a Republican who represents a district in southeastern Wisconsin.

Gou said Foxconn will work closely with Japanese display maker Sharp, which it acquired last year, on its U.S. investment plans.

Rumors suggesting Foxconn might open its first U.S. factory began circulating last November, after Apple reportedly asked its suppliers Foxconn and Pegatron to look into the feasibility of producing iPhones in the United States.

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Foxconn Attempts to Ease Concerns Over China Ties as Sale of Toshiba’s Memory Chip Unit Nears End

Foxconn chairman Terry Gou has spoken out about the ongoing sale for Toshiba's memory chip unit, which has made headlines over the past few weeks as multiple companies have entered the bidding to win the sought-after unit. Previously, Foxconn was perceived as a long shot for winning the bid due to its connections with China, a fact believed to sit unfavorably with Japanese-owned Toshiba.

Now, Gou is presenting points of argument as to why Foxconn's acquisition of Japanese technology would not hurt Toshiba nor the Japanese government, because he says Foxconn would not seek to import any of Toshiba's technologies to Foxconn's China plants (via DigiTimes). Gou argued that Foxconn is simply an enterprise "seeking new markets" in Japan, "and making investments in these markets is very normal."

With Foxconn's help, Gou said that Toshiba has the potential to improve its technology so it doesn't lag behind the advancements of its competitors. Another point of contention for Japanese officials fearful of Foxconn winning the unit centered upon the China-based company leaking secrets behind Toshiba's best technology, to which Gou said such a practice would never benefit Foxconn or any of its partners.


Gou felt he had to speak out "to clarify many of the false accusations that have been made about Foxconn over the past few weeks."
Gou said that leaking technology would not benefit Foxconn or any of Foxconn's partners, and would only hurt Toshiba's future development. With all the outcomes coming out negatively, there would be no point for Foxconn to leak IP, Gou stated.

Gou noted that Toshiba's technology R&D will remain and continue to be processed in Japan, a pointed out that a company with leadership in technology development does not need to be afraid of being copied.

Since Foxconn owns its production lines and plants, details of production procedures would be kept within the plants. Foxconn would also apply to patent Toshiba's technologies to prevent infringement, Gou noted.
Gou finally said that Foxconn is simply "looking to survive" by bidding on the Toshiba memory chip unit, as well as reduce costs and improve its supply chain delivery times. The last we heard about the bidding, Foxconn had rallied U.S. companies Apple and Amazon to chip in funds to help Foxconn win the unit. Foxconn's first bid was around $27B, and it was never clear if additional funds would be enough to calm Toshiba's worries about the company's ties to China.

In another corner of the ongoing bidding for Toshiba's memory chip unit, Western Digital has continued to go after Toshiba, this week seeking a court injunction that would prevent Toshiba from selling the unit without Western Digital's consent (via Reuters). Western Digital and Toshiba are partners in the chip manufacturing business, and the new injunction is said to have emerged after the U.S.-based Western Digital discovered it was left out of a new Japanese government-led group formed to come together and bid for the unit.

Although sources close to the sale say that Western Digital's legal actions threaten to throw the whole auction "into disarray," Toshiba has said in a statement that it is proceeding with selecting a bidder "by the second half of June," as has always been planned. A final, definitive winner for the unit is expected to be decided by June 28.


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Foxconn Partnering With Apple and Amazon In Renewed Attempt to Win Toshiba’s Memory Chip Unit

Apple and Amazon will join Foxconn in a bid to win Toshiba's NAND memory chip unit, which has been on sale since March and was previously said to finally conclude bidding sometime in June. Nikkei quoted Foxconn chairman Terry Gou as saying that Apple and Amazon will "chip in funds" to help Foxconn win the final bid (via Reuters).

Gou left out the exact amount of the funding that Apple and Amazon would provide, and it was also mentioned that Japanese manufacturer Sharp, which Foxconn acquired last year, will also take place in the bidding. In an official statement, Foxconn referenced Apple and Amazon by calling the U.S. companies "strategic partners" in the bid for Toshiba's memory chip unit, while mentioning that more details would come "at the appropriate time."

Apple Inc and Amazon.com Inc will join Foxconn's bid for Toshiba Corp's semiconductor business, the Nikkei business daily quoted Foxconn Chairman Terry Gou as saying on Monday. The two U.S. technology giants plan to "chip in funds", Gou said in an interview, according to the newspaper.

"Of course Apple and Amazon are offering money together, but I cannot comment on how much funds each company is putting on the table," Gou said at a hotel in Osaka.
The sale of Toshiba's chip unit has been riddled by a legal battle with Western Digital over the past few weeks, making it uncertain who -- if anyone -- would end up winning the bid for the unit. Following the announcement of the initial sale, Apple was reportedly looking into spending several billion dollars for a "substantial stake" in the Toshiba memory chip unit, as well as potentially partnering up with Foxconn in the bidding war.

Foxconn has already been suggested as an unlikely winner of the unit due to its deep ties with China, with the Japanese government likely to oppose any winning bid that would take key Toshiba chip technology out of the country. Foxconn's previous bid of $27 billion was reportedly rejected by Toshiba, so now it appears that the manufacturer will beef up its offering for Toshiba's unit with the help of Apple, Amazon, and Sharp, although it's unclear if more money will be enough for the China-based company to win.

According to Gou, if Foxconn would win Toshiba's chip unit it plans to keep the Japanese leadership in place, which it hopes is a way to appease the Japanese government ahead of the end of bidding.
"We will definitely not undermine nor interfere with [Toshiba's existing management]. We will treat them like the way we have been treating Sharp," Gou said, adding that he was confident that Foxconn stood a good chance of winning the bid.

"We let Japanese [managers] run Sharp ... we are also hoping that Toshiba's memory unit will survive into the next 50 to 100 years at least, like Sharp."
Other bidders include Broadcom and South Korea's SK Hynix, and the winner is expected to be announced sometime this month, ahead of Toshiba's next shareholder meeting.


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