The extreme - and violent - methods used to keep Apple's secrets

Posted on 18 Feb 2010 at 09:33

Another way Apple keeps leaks to a minimum is to bring suppliers in at the absolute last minute.

"What usually happens is that we will receive a call from Apple, and by then they usually already have some idea of what exactly they want," said an official at a component supplier, who, like nearly everyone else interviewed for this story, would speak only on condition of anonymity.

An official at a South Korean supplier who said he has participated in Apple projects complained that the company sometimes makes unreasonable requests

"They usually give us a couple of options, we present some stuff to them, and they look at quite a lot of samples before coming to a final decision, sometimes just weeks before the rumored launch," he said.

Apple also helps keep its components out of the mainstream by insisting on custom designs rather than off-the-shelf parts - a practice that leaves many suppliers frustrated.

An official at a South Korean supplier who said he has participated in Apple projects complained that the company sometimes makes unreasonable requests.

"Apple also wants unique size and specifications," he said. "That means we won't be able to use a common platform or rework those components to serve other clients. And if there's any inventory left, it cannot be used any other way.

Not surprisingly, landing a contract with Apple will always include a confidentiality clause. And they usually come with stiff penalties in the event that a breach is discovered, said sources at some suppliers. These insiders added that such agreements often come on top of unannounced checks by Apple officials to maintain standards.

Two sources familiar with the matter said they were not aware of any company that has been fined for breaching a confidentiality pact. But they say a number a suppliers have been verbally warned that they were in danger of losing their contract if suspected leaks persisted.

The difficulty lies in proving the source of a leak. In the absence of solid evidence, the most Apple can do is to switch suppliers once the contract runs out, the sources said.

"Unless there's a recording or an email that can be clearly identified to a certain Apple supplier, it's all going to be a blame game with everyone pointing fingers at everyone else," one of the sources said.

Hon Hai, the huge Taiwanese manufacturer with units in China, has gone to great lengths in the past to maintain its own secrecy.

In a high-profile case in China in 2006, Hon Hai sued two Chinese reporters and asked for 30 million yuan ($4.4 million) in damages for exposing alleged subpar employment practices.

The amount was later reduced to a symbolic 1 yuan, after stinging public criticism was directed at Apple. Various groups including Reporters Without Borders wrote to Apple chief Jobs asking him to intercede in the case.

Apple's audit of Hon Hai's facilities after the case found that it was in compliance with a majority of its requirements under its supplier's code of conduct. But the company did find a number of violations that it was working to address, though it declined to disclose the specifics.

In another case that made global headlines last year, an employee in China for Foxconn was believed to have jumped to his death after being interrogated by his employer. According to local press reports, he was under suspicion of taking an iPhone prototype - to which he had access - out of the factory.

Author: Reuters

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User comments

You honestly think anyone would have any rights in China. You'd have to be deluded to think you would be safe, as this report clearly shows with someone taking a picture from public street.

The fact that any country on this planet does business with China is truly astounding, but goes to prove that money will not get in the way of anything.

By treadmill on 18 Feb 2010

What complaints?

And do you honestly think any kind of complaint would ever get to court or the news? This is big corporate money doing what it does best. Fashionable Apple Chic can hide behind China's complete disregard for Human Rights, and they all make LOTS OF MONEY. Wouldn't surprise me at all if one day we find Apple kit is actually made using Child Labour. Might take the shine off it a bit.

By Wilbert3 on 18 Feb 2010

Sounds familiar

The security sounds familiar, where have I come across that before? Oh yeah, diamond mines, although they will probably shoot you, not call the police.

I've also worked at factories and offices in the UK which have had similar levels of security. You have to leave mobile phones and cameras at the gate (well, if you bring a camera with you, you will probably not get on site, regardless of whether you leave it at the gate or not). We had cars checked at the gate, we had to carry passes at all times and the passes let you into different parts of the building.

Being set upon by guards for taking pictures of the outside of the building? Where have I heard that before? Oh yeah, LONDON, ENGLAND!

The same goes for our Royal Navy, heck, I had to have a full vetting of my family before I could get on site there - well, in theory, I got my allowed 4 temporary passes and then was refused access until the vetting was completed; I told the security guard, he would be refused his monthly salary until I had finished programming their personnel system, I got a 2 month pass! :-D

Where is the violence Where are the extreme measures? Those are measures that many companies have used for the last hundred years or so.

This is a Foxconn facility, you even said Apple's products are made in compounds like Longhua, not *in* Longhua...

The violence seems to be Foxconn's security, not Apple's staff.

The paranoia, the not talking to the family about what you are doing, that is NORMAL for many large companies, even in Europe and America.

Heck, for my current job, working for a chemical company, I had to sign a confidentiality clause in my contract, that I wouldn't discuss company plans or manufacturing details with anybody outside the company!

By big_D on 19 Feb 2010

Similar thing has happened to me while visiting a TNT archival site near Birmingham...

By forquare1 on 19 Feb 2010

Confidentiality clauses are so common I'd be very surprised if the reporter themself hasn't signed a few here and there. They are sensible for a business to protect valuable secrets. Some of the methods employed seem rather excessive, but I don't know what financial law is like in china - it may be that it is nearly impossible to take money from employees under such clauses, for example.

By Penguat on 19 Feb 2010

I thought it was interesting that...

...the article started off by noting that many of these companies, and many of their clients, engage in similar behaviour, and then, wham! three pages of isn't-Apple-evil-because-of-all-this-cloak-and-dag
ger-stuff?

I've been in various facets of the software industry for 30 years, and I've never seen a company that wasn't zealously protective of secrets; there's a whole mystique that's been built up about "stealth mode" startups, for instance. For a company with potentially billions of dollars at stake over the lifetime of a product, how much security is enough?

Microsoft try to do the same thing from time to time. They're just miffed because they never manage to pull it off.

By jdickey1 on 21 Feb 2010

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