By Yifan Wang 
 

Apple Inc. has suspended new business with key supplier Pegatron Corp. after finding that the company violated the U.S. smartphone maker's rules related to student worker programs at its China facilities.

The Cupertino, Calif.-based technology giant said it has placed Pegatron on probation and won't give the Taiwanese company any new business until it completes all required corrective actions.

"Pegatron misclassified the student workers in their program and falsified paperwork to disguise violations of our Code," Apple said in a statement.

Pegatron has fired the executive with direct oversight of the program, according to Apple.

Shares of the Taipei-based electronics company fell swiftly in late Monday trading. The stock closed 2.1% lower, its steepest one-day decline since late September.

In a statement, Pegatron said the violations involved its plants in Shanghai and Kunshan. The company said it has since removed the student workers from production lines and made arrangements for them to return home or school with proper compensation.

 

Write to Yifan Wang at yifan.wang@wsj.com

 

(END) Dow Jones Newswires

November 09, 2020 05:01 ET (10:01 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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