Apple Audit Confirms WD, M-Flex Business

TECHNOLOGY: Details on supply chain in ethics report

Three Orange County-based companies were listed as Apple Inc. suppliers earlier this month in an internal audit the Cupertinobased company conducted on its largest vendors in 2011.

Chipmaker Broadcom Corp. disk drive maker Western Digital Corp., both based in Irvine, and printed circuit board maker Multi-Fineline Electronix Inc. in Anaheim were among the 156 companies listed in its annual Supplier Responsibility Progress Report.

The report aims to en-sure ethical and responsible practices among vendors.

The rare glimpse into the company's guarded supply chain came as a byproduct of the report.

Indirect accounts in trade publications and executive comments in September indicated Broadcom was a longtime supplier of Apple.

Apple's audit confirmed such reports, and shed light on other relationships with OCbased companies.

Western Digital introduced its first line of disk drives for digital music players and other hand-held consumer electronics about seven years ago. The company targeted music players, personal digital assistants, wireless phones and digital cameras.

It's not clear which Apple products use Western Digital's drives, although trade reports point to the MacBook. Western Digital entered the gadget market at a time when rival Seagate Technologies Inc. was shipping more than 1 million drives a quarter for Apple's iPod music player.

Seagate

Seagate, which recently moved its headquarters from Scotts Valley to nearby Cupertino, also is listed as a supplier in the audit report, demonstrating Apple's reluctance to rely on a single partner for specific components or parts.

Multi-Fineline, better known as M-Flex, makes circuit boards used in cell phones, smart phones and other mobile devices. The boards are flexible, which makes them easier to design into phones, barcode scanners and other devices.

M-Flex is in the midst of a multi-year strategy to shift its production to China.

The Business Journal reported in October the company planned to sell its longtime Anaheim headquarters and relocate to a smaller office within Orange County as part of that initiative.

M-Flex Move

M-Flex officials have kept mum on the relocation.

Its competitors include Singapore-based Flextronics International Ltd., Young Poong Electronics Co. in South Korea and Foxconn Electronics Inc. in Taiwan, among others.

Flextronics and Foxconn also were on Apple's supplier list.

Foxconn was singled out in the 27-page report for a "core violation" stemming from an explosion at the company's Chengdu factory in May that killed four workers and injured 18 others.

Broadcom tends to stay tight-lipped on its business ties with Apple but made an exception in September when Chief Executive Scott McGregor mentioned Apple cofounder Steve Jobs in the wake of his decision to step down as chief executive.

"As one of our largest, long-term customers, Apple is an innovation powerhouse and we fully expect the company to continue its tradition of technology breakthroughs," McGregor said. "Apple has a deep and broad bench of engineers and staff who will continue the innovative work Jobs inspired."

It was a rare public confirmation by Broadcom of any business ties to Apple.

Jobs died in October after fighting pancreatic cancer.

Broadcom's stock performance tends to track Apple's, and it will bear watching if Apple's ties to Western

Digital and M-Flex follow suit.

Broadcom makes communications, radio and touch-screen chips that go into Apple's iPods, iPhones and iPads, among other products.

San Luis Obispo-based technology website iFixit.com in June reported that it had uncovered a Broadcom Wi-Fi transceiver and Bluetooth in Apple's new MacBook Air, pointing to another line of sales for the chipmaker.

Behind the Audit

The 2012 Supplier Responsibility Progress Report is part of an Apple initiative to curb labor, health and environmental infractions among suppliers.

The disclosures marked the first time the company released such information publicly and may have been prompted in part by rising criticism of labor and environmental violations carried out by its supply chain, particularly in Asia.

Apple audited 229 suppliers for the report, up 80% from 2010.

More than 100 factories had never been audited.