Apple insists on secrecy bites Hyundai

Hyundai confirmed in a brief statement last week that it was in early talks with Apple about cars. Almost immediately, the Korean car giant began tracking down and issued a subsequent statement that removed all mention of Apple.

Hyundai’s withdrawal is almost certainly the latest impact of Apple’s insistence on secrecy and discretion of its suppliers or potential partners. Businesses involved with Apple are held under strict disclosure agreements, even if they are public companies and Apple is a major customer.

Although non-disclosure agreements are common in high technology, people working with Apple say they take confidential information more seriously than competitors. Apple tells partners that they can not name Apple in public or in the media, according to people familiar with the matter who do not want to be identified, so they can not risk their relationship with Apple. One person who worked with Apple described his confidentiality requirements as many hoops to jump through.

In at least one case, Apple threatened to penalize suppliers $ 50 million for each leak, according to a contract that became known as part of a bankruptcy process by supplier GT Advanced Technologies.

Some businesses may have limited discussions about their business with Apple, especially if Apple has spoken publicly about the relationship and approved it. One example is Corning, which supplies glass for iPhones. Apple has paid the company at least $ 450 million since 2017, highlighting it in its own press releases as an example of a U.S. manufacturing company it supports.

The CEO said earlier this year he was not comfortable talking about the relationship before Corning’s new stronger glass was unveiled during the recent iPhone 12 live stream.

“I have to tell you that it does not feel quite right to use Apple’s name out loud. I still think I’ve never done it. Within the company we have a code name for Apple, we never even say ‘Apple “No. within the company,” Corning CEO Wendell Weeks said during an income call in October. “So if you could see me, I sound like I’m getting a little pink and I’m having an anxiety attack when I read their name aloud. “

Apple’s obsession with secrecy is one of its defining aspects – some Silicon Valley insiders jokingly call it the ‘Fruit Company’. In 2011, Apple even sold a shirt in its campus gift shop with the caption “I visited the Apple campus. But that’s all I can say.”

Apple’s secrecy can be linked to founder Steve Jobs, who insisted. Jobs was a master marketer who perfected the product launch as a spectacle, often relying on surprises to keep the show going when discussing new products.

Apple today still relies on ‘surprise and joy’ during the launch of products, which is still an important marketing strategy. Apple has released three separate live streams this fall to release new Apple Watches, iPhones and Mac laptops. All three offers attracted millions of viewers who agreed on YouTube to hear directly from Apple executives about its new products.

Apple regards details on non-exempt products as ‘one of its biggest assets’. Apple’s policy on business conduct from October states that employees should be ‘very selective’ when disclosing Apple business information to vendors or suppliers, and they should only do so after a non-disclosure agreement exists. The textbook also says that vendors should follow Apple principles such as confidentiality.

“If there is a business need to share confidential information with a supplier, supplier or other third party, you should never volunteer more than is necessary to address the business in question,” according to the policy. “Confidential information shared outside of Apple must be covered by a non-disclosure / confidentiality agreement.”

Even with low NDAs and a limited ability to announce a customer profit, many vendors stand a chance of selling to Apple.

Cirrus Logic, a maker of audio discs, said in an SEC filing in March that Apple accounted for 81% of its total sales in fiscal 2020, amounting to $ 1.28 billion.

Yet Cirrus executives rarely say Apple’s name, and they have avoided it altogether for years. In 2017, an investor offering included a slide with a variety of logos of their customers. Apple’s logo was nowhere to be found. Instead, the Cirrus slide contains a picture of a brown box with the words “# 1 CUSTOMER”. Recent investment slides simply say that Cirrus Logic delivers the top seven smartphone manufacturers.

“Before we begin with the questions and answers, I would also like to note that although we understand this intense interest in our largest client, in line with our policies, we do not discuss the details of our business relationship,” said John Forsyth, president. of Cirrus Logic, said at a conference call with analysts in November, as the company regularly says before discussing its own earnings. A Cirrus spokesperson made the same statement in response to a question for this article.

Other public companies also use euphemisms when discussing the iPhone manufacturer’s business. Last June, Broadcom CEO Hock Tan indicated that the iPhone 12 would be released later than usual when discussing the wireless revenue projections. However, he did not mention Apple – he was talking about ‘our big North American mobile phone customer’, even after a previous deal with Apple was big enough to earn an SEC filing, albeit a small one.

In 2014, bankruptcy proceedings gave a glimpse of how Apple needs secrecy for its suppliers. In 2013, GT Advanced Technologies entered into an agreement with Apple to offer raw sapphire balls to make scratch-resistant iPhone screens. GT was unable to manufacture the sapphire in its Apple business in Arizona, and declared bankruptcy, leaving Apple as a major creditor.

During bankruptcy proceedings, GT offered a confidential contract stating that GT would pay $ 50 million per leak. The contract mentions three separate confidentiality contracts to which the sapphire manufacturer has agreed. GT also said that the terms of its confidentiality agreements should be kept secret.

Another contract states that any publicity to which Apple relates will require written approval.

Apple settled with GT shortly after the $ 50 million fine for leaks was revealed. One condition for the settlement was that GT would keep a ‘description of its relationship with Apple’ private.

Apple declined to comment on this story.