Apple’s insistence on secrecy bites Hyundai

Hyundai confirmed last week in a brief statement that it was in initial talks with Apple about the cars. Almost immediately, the Korean car giant began to back down, posting a later statement that removed any mention of Apple.

Hyundai’s withdrawal is almost certainly the last consequence of Apple’s insistence on secrecy and the discretion of its suppliers or potential partners. Companies that deal with Apple have strict non-disclosure agreements, even if they are public companies and Apple is a major customer.

While non-disclosure agreements are common in high technology, people who work with Apple say they take confidential information more seriously than competitors. Apple tells partners they can’t mention Apple in public or in the media, according to people familiar with the subject who didn’t want to identify themselves to avoid risking their relationship with Apple. One person who has worked with Apple described their secret requirements as a bunch of hoops to go through.

In at least one case, Apple has threatened to penalize vendors with $ 50 million for each individual leak, according to a contract that was made public as part of a bankruptcy proceeding against supplier GT Advanced Technologies.

Some companies may engage in limited discussions about their business with Apple, especially if Apple has publicly spoken about the relationship and approves of it. An example is Corning, which supplies glass to iPhones. Apple has paid the company at least $ 450 million since 2017 and highlighted it in its own press releases as an example of a US-backed manufacturing company.

But its CEO said earlier this year that he didn’t feel comfortable talking about the relationship until Corning’s new strongest glass was mentioned during the recent live launch of the iPhone 12.

“I have to tell you that it’s not entirely right to use Apple’s name out loud. I still don’t think I’ve ever done that. Within the company, we have a code name for Apple, we don’t even say it.” Apple “within the company,” Corning CEO Wendell Weeks said in a profit call in October. “So if you could see me, I feel like I’m a little pink and I have an anxiety attack, if I read his name out loud.”

Apple’s obsession with secrecy is one of its defining aspects: some Silicon Valley experts jokingly call it the “Fruit Company.” In 2011, Apple even sold a t-shirt at the campus gift shop that said “I visited Apple’s campus. But that’s all I can say.”

Apple’s secret can be related to its founder, Steve Jobs, who insisted on it. Jobs was a marketing genius who perfected the product launch as a show, often relying on surprises to keep the show in discussion about new products.

Today, Apple still relies on “surprise and delight” during product launches, which remain a key marketing strategy: Apple held three live streaming broadcasts this fall to launch new Apple Watches laptops, iPhones and Macs. The three presentations attracted millions of viewers who tuned in to YouTube to hear directly from Apple executives about their new products.

Apple considers the details of unreleased products to be “one of its great assets.” In Apple’s business conduct policy in October, it says employees should be “very selective” when it comes to disclosing Apple business information to suppliers or vendors, and that they should only do so after a non-disclosure agreement has been established. The manual also says that vendors must follow Apple’s principles such as confidentiality.

“When there is a business need to share confidential information with a supplier, vendor, or other third party, never offer more willpower than is necessary to address the business,” according to the policy. “Any confidential information shared outside of Apple should be covered by a non-disclosure / confidentiality agreement.”

Even with layers of NDAs and a limited ability to publicize a customer’s profits, many vendors have the ability to sell to Apple.

Cirrus Logic, an audio chip maker, said in an SEC filing in March that Apple accounted for 81 percent of its total sales during fiscal 2020, which was $ 1.288 billion.

Still, Cirrus executives rarely say Apple’s name and for years completely avoided it. In 2017, a presentation for investors included a slide with various logos of their clients. The Apple logo was nowhere to be found. Instead, the Cirrus slide included an image of a brown box with the words “CUSTOMER # 1.” Recent investor slide covers simply say that Cirrus Logic supplies the top seven smartphone makers.

“Before beginning the questions and answers, I would also like to point out that while we understand this intense interest related to our largest customer, in accordance with our policy, we do not discuss details about our business relationship,” he said. president of Cirrus Logic, John Forsyth. at a conference call with analysts in November, as the company regularly says before discussing its own earnings. A Cirrus spokesman provided the same statement in response to a question from this article.

Other public companies also use euphemisms when they have to talk about the iPhone manufacturer’s business. Last June, Broadcom CEO Hock Tan suggested that the iPhone 12 would be launched later than usual when discussing its wireless revenue projections. However, he did not mention Apple: he spoke of “our great American mobile phone customer,” even after a previous deal with Apple was large enough to deserve the SEC’s filing, albeit with little details.

In 2014, bankruptcy proceedings took a look at how Apple requires secrecy for its suppliers. In 2013, GT Advanced Technologies signed an agreement with Apple to provide raw sapphire balls to create scratch-resistant iPhone screens. GT was unable to manufacture the sapphire at its Apple-owned Arizona facility, and went bankrupt, leaving Apple as the main creditor.

During the bankruptcy proceedings, GT filed a contract with the confidential title that said GT would have to pay Apple $ 50 million for leakage. The contract mentioned three separate confidentiality agreements to which the sapphire manufacturer had agreed. GT also said the terms of its confidentiality agreements needed to be kept secret.

Another contract said any Apple-related advertising would require written approval.

Apple settled with GT shortly after the $ 50 million penalty for leaks was revealed. One of the terms of the deal was that GT would keep private a “description of its relationship with Apple.”

Apple declined to comment on this story.