Cheap iPhone 'confirmed' by labor abuse report

The long-rumored cheap, plastic iPhone is "confirmed" by a report on labor practices

A mock-up of the rumoured entry-level iPhone (Image credit: MacRumors)

A mock-up of the rumoured entry-level iPhone (Image credit: MacRumors)

The long-rumoured cheap, plastic iPhone is "confirmed" by a report on labor practices at the Chinese manufacturer that is assembling the device, according to the interpretation of some bloggers and tech news sites.

The report, "Apple's unkept promises: cheap iPhone come at high costs to Chinese workers" is by China Labor Watch, a New York City-based rights group, which planted undercover workers in three mainland China factories owned by Taiwan-based Pegatron Group, one of the contract manufacturers used by Apple to assemble its products.

(Pegatron's share of Apple's business currently seems to be far smaller than another better known Apple assembler, Taiwan-based Hon Hai Precision Industries, better known as Foxconn, which has come under fire in the past for labor abuses.)

In fact, as the title makes clear, the report's main narrative is based on CLW's conclusion that Apple is manufacturing a cheaper version of the iPhone, to be released later this year, and doing so by exploiting or allowing Pegatron to exploit the workers on the assembly lines.

CLW says it documented 86 labor rights violations at the factories, in such areas as hiring discrimination, women's rights violations, underage labor, excessive working hours, insufficient wages, and poor working and living conditions.

From the report's Executive Summary:

"Apple is preparing to release a cheap iPhone. Just how does a prosperous company like Apple produce a discounted version of its phones?

"At this moment, in Shanghai, China, workers in Apple's supplier factory Pegatron are monotonously working long overtime hours to turn out a scaled-back, less expensive version of the iPhone. Six days a week, the workers making these phones have to work almost 11-hour shifts, 20 minutes of which is unpaid, and the remainder of which is paid at a rate of $1.50 an hour ($268 per month) before overtime. This is less than half the average local monthly income of $764 and far below the basic living wage necessary to live in Shanghai, one of costliest cities in China...."

The summary continues: "So what is the competitive advantage that Pegatron has utilized to win Apple's order of the cheap iPhone? Extensive labor violations and suppressed wages that cheat workers of a living wage, a healthy working environment, and a voice. As Apple launches its cheaper iPhones, it continues to profit while cheapening the value of the workers in its supply chain."

The comments are based in part on the experience of the undercover workers, spanning a period of several months earlier this year.

One worker describes his experience of a day on the assembly line as follows:

"The task on my assembly line is to assemble back covers. The assembling of other parts of the cell phone, including the final assembly into a finished product, is assigned to different production facilities, each facility partitioned off by heavy curtains so that workers in different departments are isolated from one other. Today's work is to paste protective film on the iPhone's plastic back cover to prevent it from being scratched on assembly lines. This iPhone model with a plastic cover will soon be released on the market by Apple. The task is pretty easy, and I was able to work independently after a five-minute instruction from a veteran employee. It took around a minute to paste protective film on one rear cover. The new cell phone has not yet been put into mass production, so quantity is not as important. This makes our job more slow paced than in departments that have begun mass production schedules."

Aside from the abuses themselves, bloggers and technology news websites generally are interpreting the CLW information as confirming the existence of a cheaper, plastic-bodied iPhone, which has long been rumored.

"Apple's [AAPL] future plan to introduce a plastic iPhone is confirmed within this morning's shocking report into labor abuses at manufacturing partner, Pegatron," writes Computerworld's Appleholic blogger, Jonny Evans.

Evans linked to his own June 2013 post, headlined "Pegatron CEO confirms Apple's not so 'cheap' iPhone mini". But he based that claim on a post from the Japanese-language site Macotakara, which in turn based its account on a post at the Chinese language site, ChinaTimes

The Google Translate version of the ChinaTimes story is almost laughably obscure. Here's the opening: "And Master (4938) next version of Apple's new phone, the outbreak of the second half strong operational, but the chairman Tong Zixian rare on the market called cheap' iPhone quite critical, which means Price (price) is still high,' and that the electronics industry in the second half will be modest warming, PC will have some homecoming tide can be expected."

The Verge was somewhat more restrained in its assessment. "In particular, it sounds like the Pegatron factories are the site of the oft-rumored, low-cost plastic iPhone that Apple is expected to introduce later this year alongside a new iPhone 5S," writes Nathan Ingraham. In conclusion, he added, "Plans could still change, and this report shouldn't be taken as gospel in regards to future Apple products, but it's another piece of evidence that points to a new entry into the iPhone category."

AppleInsider interprets the CLW comments as evidence that the plastic phone is in either "initial production" or "testing," with "mass production" starting "soon." The headline: "Labor report reveals low-cost plastic iPhone in initial production at Pegatron."

Wall Street Journal Reporter Jessica Lessin, in a story this week, asserts that "Apple is working on a lower-end iPhone according to people briefed on the matter."

Either her sources weren't given much detail in the briefings, or they didn't give much of that detail to Lessin, because her story is notable for its absence. "The cheaper phone could resemble the standard iPhone, with a different, less-expensive body, one of the people said," Lessin writes. For someone who has been "briefed" on the cheap iPhone, this is pretty tentative.

Lessin recycles other long-rumored, and long-believed, cheap iPhone assertions. "Many other parts could remain the same or be recycled from older iPhone models," she writes.

Yet how much cheaper would such a phone actually be at retail, in the unsubsidized smartphone markets in "emerging economies" such as Brazil, China, and India? If Apple keeps the iPhone 5 processor and Retina display screen, the Lightening dock connector, how many elements of older models can it still incorporate? If it doesn't keep these components, and reuses older versions, why would someone pay for what amounts to an older iPhone with a plastic body when they can already by discounted iPhone 4 and iPhone 4S models?

One source tells her that the plan for a cheap iPhone "is progressing and a less expensive version of its flagship device could launch later this year." The "could" puts a different twist on the meaning of "Apple is working on a lower-end iPhone." It depends on what one means by "working on."

Tags PegatronAppleconsumer electronicsNetworkingsmartphoneswirelessanti-malware

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John Cox

Network World

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