Apple's weak link on secrets: Contract equipment manufacturing?

Apple's weak link on secrets: Contract equipment manufacturing?

Summary: Reading about how a Flextronics employee was yapping about Apple's sales forecasts, product plans and internal code names makes you wonder why insider information doesn't leak out more.

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TOPICS: Apple
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Reading about how a Flextronics employee was yapping about Apple's sales forecasts, product plans and internal code names left me with two distinct reactions. First, I'm surprised that this insider information doesn't leak out more. And then there's the realization that the U.S. tech manufacturing base is hollowed out.

First, the good news. To the contract equipment manufacturing industry's credit, Walter Shimoon, the Flextronics employee spilling the beans on Apple's inner workings for a measly $22,000, appears to be a rarity. Non-disclosure agreements between tech vendors and their manufacturers are kept every day. Bad apples (pardon the pun) exist.

Nevertheless, when you depend on a manufacturer far away you have a trade secret weak link. Shimoon knew he was sitting on great information about the iPad. In a phone conversation detailed in the FBI complaint, he said:

"They [Apple] have a codename for something new...it's a new category altogether...It's a very secretive program, but I'm not involved. So, uh, you know, I don't really care...I believe it's called K48...that's the internal name...So at Apple you can get fired for saying K48 outside of a meeting that doesn't have K48 people in it. That's how crazy they are about it."

And the unedited version.

Shimoon didn't care because he didn't work for Apple either via his direct project and couldn't feel the wrath of CEO Steve Jobs. In a world where U.S. companies rarely make much of anything---oh sure we design the stuff---trade secrets can walk out the door with relative ease.

And that brings me to my second reaction. It's sad that the U.S. just doesn't make things anymore. Would an Apple manufacturing employee been so quick to hand over trade secrets? Maybe. Or maybe not. It should be noted that the other folks arrested in the U.S. government sting did work for Dell and AMD. We can't go indict the entire contract equipment manufacturing industry over a high-profile case.

But the manufacturing issue in the U.S. does spark a few conflicted feelings for this usually pro-globalization guy. Shimoon's yapping about Apple's trade secrets just surfaced them.

Topic: Apple

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10 comments
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  • Sad indeed

    America can return to doing its manufacturing if it has the determination to do so.

    The key legislature in the beltway need to grow a pair.
    Dietrich T. Schmitz, ~ Your Linux Advocate
    • RE: Apple's weak link on secrets: Contract equipment manufacturing?

      @Dietrich T. Schmitz, Your Linux Advocate

      It got nothing to do legislature, it people not willing to pay the amount of money it would cost to produce the products we use in the western world. People want the best, the brightiest an the most advance but they want to pay the least amount for it.
      Knowles2
      • Interesting how they can still manufacture high tech

        products in Japan. Yes I know the Japanese have outsourced too, but not to the extent of the US.<br>@Knowles2
        GoPower
      • RE: Apple's weak link on secrets: Contract equipment manufacturing?

        @GoPower

        Japan's manufacturing isn't all that it seems. There is a lot of work done by people in their garages, doing piece work for large manufacturers
        msalzberg
      • RE: Apple's weak link on secrets: Contract equipment manufacturing?

        @msalzberg<br><br>That may be the case, but it still seems that if you put, say, an Apple product side-by-side with a Japanese manufactured Sony product (and few of them are) like the Z Series Vaios, you can still spot the delicate manufacturing or engineering difference that give the Sony just a bit more "polish". In fact, some of the Z Series are made in the U.S. and I can even detect differences in the manufacturing quality of the U.S. vs. Japan models.
        Playdrv4me
      • RE: Apple's weak link on secrets: Contract equipment manufacturing?

        @Knowles2

        It's people not willing to pay the exorbitant prices caused by unions making unskilled labor jobs pay $40 plus massive benefits. You see it on a smaller scale in the auto industry with assembly and manufacturing moving to states that do not force Union membership.

        The legislature is at least partly at fault here.
        bwalker
    • RE: Apple's weak link on secrets: Contract equipment manufacturing?

      @Dietrich T. Schmitz, Your Linux Advocate

      It got nothing to do legislature, it people not willing to pay the amount of money it would cost to produce the products we use in the western world. People want the best, the brightiest an the most advance but they want to pay the least amount for it.
      Knowles2
    • RE: Apple's weak link on secrets: Contract equipment manufacturing?

      @Dietrich T. Schmitz, Your Linux Advocate

      Having just shopped around a product which is at the moment taking me about $6 to make in China, the US cost was close to $20. It has nothing to do with legislature, it has more to do with this sense of entitlment many low level US employees have and the beaucratic mess of regulated insurance etc. that must be carried which is what drives the hourly cost of manufacturing. If the price difference were a dollar or 2 in my case, I would have easily chosen to manufacture here, but sadly, for small to mid businesses, it will just never happen.

      On higher end electronics, I'm not a bit more skeptical.
      omdguy
  • RE: Apple's weak link on secrets: Contract equipment manufacturing?

    Nope.
    james347
  • RE: Apple's weak link on secrets: Contract equipment manufacturing?

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