Apple said it had stopped giving “new business” to its second-largest iPhone assembler Pegatron and placed it on “probation” after the company used illegal student labour at its plant near Shanghai.

Until last month, thousands of student interns had assembled iPhones at Pegatron’s Kunshan plant and worked overtime and night shifts, which is illegal under Chinese law, according to former interns and workers at the plant.

“Apple has placed Pegatron on probation and Pegatron will not receive any new business from Apple until they complete all of the corrective actions required,” Apple said.

Apple did not respond to queries about how exactly it defined “new business” and what the material impact of the “probation”, if any, would be on Pegatron.

The alleged coercive use of students during the factory’s peak production periods, especially during Apple’s annual new iPhone launch in October, mirrors the abuses previously found by the Financial Times at Foxconn, Apple’s biggest iPhone supplier. Schools and local governments often collaborate to ensure labour supply for big companies in China.

Students told the FT they had been forced by their schools to intern at the Pegatron plant in order to graduate with degrees with little relevance to factory work, such as graphic design and computer science.

“We have a rigorous review and approval process for any student worker program, which ensures the intern’s work is related to their major and prohibits overtime or night shifts. Pegatron misclassified the student workers in their program and falsified paperwork to disguise violations,” said Apple.

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Pegatron said: “During [a] recent monitoring program conducted by our customer, some student workers at Pegatron Shanghai and Kunshan campus were identified working night shifts, overtime and in positions unrelated to their majors, which were not in compliance with local rules and regulations.”

Apple’s main iPhone supplier Foxconn has historically been linked to labour abuses, following a series of suicides of factory workers in 2010. But in recent months, alleged abuses at Pegatron have also appeared on the Chinese internet.

In September, the company apologised after a video went viral on social media of managers at the Kunshan plant throwing workers’ identity cards on the floor during a routine roll-call, forcing workers to stoop to pick them up. Chinese state media also covered the incident.

The following month, the relatives of Fu Jie, an army veteran in his thirties working at Pegatron’s Kunshan plant, protested at the factory gate after he died suddenly. In the absence of a public statement from the factory, news of the death spread by word of mouth and social media. Some workers formed a WeChat mutual support group for those at “the internet-infamous black factory, Pegatron”.

“Pegatron isn’t like other factories. They will force you to work overtime: 12 hours per day,” said one former worker, adding that this was to make up for rush orders or staff quitting.

“Once you step on to the factory floor, you can’t stop working until lunchtime. Sometimes you get orders you can’t complete — 600 to 1,000 [iPhones] per hour — and then they don’t let you eat lunch,” said the former worker. Pegatron did not immediately respond to the worker’s claims.

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Apple’s annual new product launches are the busiest period for its suppliers in China, which have to rush to boost staff and working hours to meet a sudden increase in orders.

Pegatron’s Kunshan plant ordered students to stop working on October 23, according to a notice sent to one of the students. The student said that his class of roughly 1,000 students had been transferred by their teachers to another electronics factory in the city of Chuzhou.

After being interviewed by the FT over WeChat, the Chinese social media app, one factory employee was warned by his manager. The incident suggested collaboration between Pegatron and local government bureaus with powers to surveil citizens’ communications. Pegatron declined to comment on the issue of surveillance.

Additional reporting by Qianer Liu in Kunshan

Via Financial Times