01 Jul 2012
Origins: Apple iPod
by Karen Feridun
Shenzhen in Southern China is considered to be one of the fastest growing cities in the world. Once a fishing village whose name can be traced back to the Ming Dynasty, Shenzhen’s proximity to Hong Kong led Deng Xiaoping to declare it a Special Economic Zone in 1979 where capitalism could be practiced. Among the businesses that flocked to the area were many high tech and software companies. More recently, Shenzhen has been dubbed iPod City. It gets the sometimes dubious distinction because one of the city’s largest employers is a company called Foxconn International Holdings, one of the major players in the iPod’s supply chain.
Foxconn is a subsidiary of Hon Hai Precision Industry, reputed to be the world’s largest contract manufacturer of electronics. Hon Hai’s clients include Dell, Motorola, Hewlett Packard, Nokia, Sony, Nintendo, and Apple. In 2007, the Wall Street Journal’s Jason Dean visited Hon Hai/Foxconn’s Longhua Science and Technology Park in Shenzhen and found a sprawling walled city measuring 1.9 miles by .75 miles, containing within a hospital, swimming pool, basketball courts, an athletic field, a bookstore, and restaurants, in addition to the factories where the companies’ 270,000 employees make a some of the world’s best-known electronics products, including the iPod and iPhone.
Hon Hai/Foxconn is just one of the companies in Apple’s supply chain. High tech companies are notoriously tight-lipped about their suppliers, so industry analysts have devised other ways to determine where their products come from. Portelligence, now part of UBM TechInsights, specializes in something called product teardown analysis. Products are dismantled and the components are examined to see if they can be traced to their manufacturers. In 2007, a team of U.C. Irvine researchers from the school’s Personal Computing Industry Center turned to iPod teardown reports for their study, Who Captures Value in a Global Innovation System? The case of Apple's iPod.
Using information gathered from a teardown of a 30GB Video iPod from 2005, Kenneth L. Kraemer, Jason Dedrick, and Greg Linden reported that the 10 most expensive inputs came from companies headquartered in the U.S., Japan, Taiwan, and Korea. Japan’s Toshiba and Toshiba/Matsushita provided the hard drive and display assembly, respectively. The mobile 8MB RAM was traced to the Japanese firm, Elpida. The battery pack was also identified as coming from Japan, but the supplier couldn’t be identified. Taiwan’s Inventec was credited with insertion, test, and assembly. Other Taiwanese suppliers of the back enclosure and main printed circuit board couldn’t be identified. Korea’s Samsung supplied the mobile SDRAM 32-bit memory. U.S. manufacturers Broadcom and PortalPlayer provided the video/multimedia processor and controller, respectively. However, Broadcom’s processor is made in its facilities in Taiwan or Singapore and PortalPlayers’ controller is made in the U.S. and Taiwan.
Further investigation fills gaps and provides some clarification. According to a report by Lee Han Shih, founder, publisher, and editor of asia! Magazine, Catcher Technology makes the stainless metal casing for iPods and iPhones. Still another report, this one from DigiTimes in 2006, names seven Taiwanese suppliers of printed circuit boards: Gold Circuit Electronics, Tripod Technology, Nan Ya Printed Circuit Board, Unimicron Technology, Compeq Manufacturing, Wus Printed Circuit, and APCB. As for PortalPlayers’ controller, Salon.com reported in 2005 that the manufacturing would be outsourced to Taiwan and that the chip’s design would be split between the U.S. and Hyderabad, India. As the list of suppliers and locations keeps growing, remember, we’ve only covered 10 of the 451 parts that make up an iPod!
In its Supplier Responsibility 2010 Progress Report, Apple states that it has audited 190 facilities since 2007 in China, the Czech Republic, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand, and the United States, though they don’t specify which products those suppliers support. The audits were done in response to reports of poor working conditions that were originally cited in Britain’s Mail on Sunday in 2006. The reports prompted Apple and other clients to launch investigations. In their 2009 audits, Apple claims to have found 17 core violations: “eight violations involving excessive recruitment fees; three cases where underage workers had been hired; three cases where our supplier contracted with noncertified vendors for hazardous waste disposal; and three cases of falsified records provided during the audit”. Critics call the audits great public relations, but claim they don’t fix the problems. In fact, despite Apple’s attempts to hold suppliers to a code of conduct, the news from iPod City isn’t good. In 2009, an employee committed suicide, something not mentioned in the 2010 report, and eight more employees at iPod City have committed suicide this year, as has an employee of a different Foxconn factory.
Last September, Apple announced that it had sold 220 million iPods since they were introduced in 2001. Will Gilbert bought one. He heads up the bioinformatics group at the University of New Hampshire’s Hubbard Center for Genome Studies. His iPod holds the entire human genome. LoPresti Aviation uses an iPod as a “black box” in its Fury aircraft. Of course, most iPod owners use them to listen to their favorite tunes. In fact, the iPod has revolutionized the way we listen to music, much to the surprise of, perhaps, just about everyone but Steve Jobs who was there for the launch. Journalists and analysts covering the event were underwhelmed and thought it would go the way of the Newton, Apple’s failed Personal Digital Assistant (PDA). What’s next for the iPod? A recent patent application submitted by Apple suggests that the next generation of the iPod could function as a portable television and DVR. Whatever it is, we’ll be there to track down its origins.
Next time, Patagonia Apparel
Shenzhen (Wikipedia Entry)
Welcome to iPod City, by Nick Webster, Mirror.co.uk News, 6/14/2006
The People Who Make Your iPhone, by Lee Han Shih, Asia! Through Asian Eyes, May 19, 2010
The Forbidden City of Terry Gou: His complex in China turns out iPhones and PCs, powering the biggest exporter you've never heard of, by Jason Dean, WSJ, 8/11/2007
Apple iPod, iPhone Manufactured in Fantabulous Outsourcing City, PMP Today, 8/13/2007
TechInsights Product Teardown Services from Company Website
Who Captures Value in a Global Innovation Network? The Case of Apple's iPod, by Greg Linden, Kenneth L. Kraemer, and Jason Dedrick, Communications of the ACM, March 2009, Vol. 52, No. 3
Who Captures the Value in a Global Innovation System?, by Greg Linden, Kenneth L. Kraemer, and Jason Dedrick, Report from Personal Computing Industry, Center, UC Irvine, 06/01/2007
Apple's latest circuit board: Apple now has seven Taiwan-based circuit board suppliers for iPods with the addition of Gold Circuit Electronics, Macworld, 12/01/2006
The World in the iPod, by Andrew Leonard, Salon.com, 06/03/2006
High-Tech's “Sweatshop” Wake-Up Call, by Peter Burrows, Bloomberg Businessweek, 06/15/2006
Apple's Supplier Responsibility 2010 Progress Report, February 2010
Special Report: Silicon Sweatshops, by Jonathan Adams and Kathleen E. McLaughlin, GlobalPost, 11/17/2009
Another Foxconn Worker Dies in China; 9th in 2010, by William Foreman, Associated Press, Bloomberg Businessweek, 05/21/2010
Live Updates from Apple’s iPhone OS 4.0 Special Event, 04/08/2010
Beyond MP3s: IPod Holds Genome, by Kristen Philipkoski, Wired, 11/06/02
Fury Flying with J.W. 'Corkey' Fornof, LoPresti Aviation Newsletter, 12/2009
How the iPod Changed Everything, by Matt Hartley, Globe and Mail, 05/12/2009
Apple's Media Players Will One Day Be Both Portable TV & DVR, by Jack Purcher, Patently Apple, 01/14/2010