Apple’s insistence on secrecy bothers Hyundai

Hyundai confirmed in a brief statement last week that it was negotiating with Apple about cars. Almost immediately, the Korean auto giant began to back off, issuing a subsequent statement that removed any mention of Apple.

Hyundai’s retreat is almost certainly the latest consequence of Apple’s insistence on secrecy and discretion from its potential suppliers or partners. Companies that deal with Apple are required to comply with strict non-disclosure agreements, even if they are public companies and Apple is an important customer.

While nondisclosure agreements are commonplace in high technology, people working with Apple say that Apple takes confidential information more seriously than competitors. Apple tells partners that they cannot mention Apple in public or in the media, according to people familiar with the matter who did not want to be identified to avoid risking their relationship with Apple. One person who worked with Apple described its confidentiality requirements as many obstacles to overcome.

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

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

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

“I have to say that it doesn’t seem quite right to use the Apple name out loud. I still don’t think I ever did that. Within the company, we have a code name for Apple, we never even say ‘Apple’ within the company, “Corning CEO Wendell Weeks said in an October earnings conference call.” So if you could see me, I seem to be getting a little pink and having an anxiety attack, if I read their names out loud. “

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

Apple’s secrecy can be traced to its founder, Steve Jobs, who insisted on this. Jobs was a marketing master who perfected the product launch as a show, often counting on surprises to keep the show going when discussing new products.

Today, Apple still has “surprise and delight” during product launches, which remain a key marketing strategy – Apple conducted three separate live streams this fall to launch new Apple watches, iPhones and Mac laptops. three presentations attracted millions of viewers, who accessed YouTube to hear directly from Apple executives about their new products.

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

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

Even with layers of NDAs and a limited ability to publicize customer achievement, many vendors take the opportunity to sell to Apple.

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

Still, Cirrus executives rarely say the name of Apple, and for years they have avoided it completely. In 2017, a presentation to investors included a slide with a variety of their clients’ logos. The Apple logo was nowhere to be found. Instead, the Cirrus slide included an image of a brown box with the words “CLIENT No. 1”. Recent presentations to investors simply say that Cirrus Logic supplies the seven largest smartphone manufacturers.

“Before we start the questions and answers, I would also like to note that while we understand this intense interest related to our biggest customer, according to our policy, we do not discuss details about our business relationship,” said Cirrus Logic President John Forsyth. in a conference call with analysts in November, as the company says before discussing its own results. A Cirrus spokesman provided the same statement in response to a question for this article.

Other public companies also use euphemisms when they need to discuss the iPhone manufacturer’s business. Last June, Broadcom CEO Hock Tan hinted that the iPhone 12 would be launched later than usual when discussing his wireless revenue projections. However, he did not mention Apple – he talked about “our big mobile phone customer in North America”, even after a previous deal with Apple was big enough to merit an SEC request, although with little detail.

In 2014, the bankruptcy process took a peek at how Apple requires secrecy for its suppliers. In 2013, GT Advanced Technologies struck a deal with Apple to supply sapphire balls to make scratch-resistant iPhone screens. GT was unable to manufacture the sapphire at its Apple-owned Arizona facility and declared bankruptcy, leaving Apple as a major creditor.

During the bankruptcy process, GT submitted a contract labeled confidential that said GT would have to pay Apple $ 50 million for the leak. The contract mentioned three separate confidentiality agreements with which the sapphire manufacturer had agreed. GT also said the terms of its confidentiality agreements should be kept secret.

Another contract said that any advertising involving Apple would require written approval.

Apple struck a deal with GT shortly after the $ 50 million penalty for leaks was revealed. One condition of the agreement was that GT would keep a “description of its relationship with Apple” confidential.

Apple declined to comment on this story.