Is Apple Swallowing its Medicine in China?
After Foxconn, another Apple (NASDAQ:AAPL) manufacturing partner in China has taken action to help its workers. TTM Technologies, a supplier of printed circuit boards, has raised its employees’ pay as Apple begins to take stock of the harsh results of an independent body’s audit in March. Apple and its manufacturing partners, specifically Foxconn, were found to be violating several labor condition rules.
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Topeka Capital Markets analyst Brian White said TTM’s decision was partly made because Apple, an important customer, had “clearly been concerned about labor issues in China.”
However, TTM’s gross margin is expected to be hurt negatively. The company recently reported sales of $300.5 million in the first quarter, falling short of the expected $321 million.
Foxconn had also announced a hike in salary for workers, mainly to make up for the pay they were expected to lose out on after the reduction of overtime hours. Despite the audit leading to better conditions, workers had reportedly been worried about a loss in pay because of the decreased overtime hours. The TTM pay hike is also expected to offset that loss.