Foxconn Could Ruin Apple's Special Event

Once again, the world's most valuable company has found itself at the center of labor law controversy. Apple AAPL and its China-based manufacturing partner Foxconn Technology are being questioned when it comes to the use of in factory plants. According to The New York Times, Foxconn willingly admits that it uses student intern services on manufacturing lines, but the rumors that they are forced to work long hours putting together iPhones are fabricated. With students making up just 2.7 percent of the Foxconn workforce, the company said they are free to leave whenever they like. With Apple holding a special event on Wednesday, (likely to unveil the iPhone 5), the timing of this new report is curious as the tech giant has allegedly been struggling to produce the amount of devices necessary for the holiday season. With that thought in mind, Foxconn may have felt pressure to save face through drastic measures – and this wouldn't be the first time. "Foxconn has come under intense scrutiny in recent months over working conditions inside factories that manufacture smartphones, tablet computers and other electronic devices for Apple, Dell, Hewlett-Packard and other technology giants," The New York Times reports. "Investigations by newspapers, outside groups and companies like Apple itself have revealed illegal amounts of overtime, crowded working conditions, under-age workers, improper disposal of hazardous waste and, in some cases, industrial accidents that have killed four people and injured more than 100 at Foxconn and other Chinese factories that supply Apple." Unlike Amazon AMZN, (whose shares climbed upon revealing its newest line of Kindles last week), Apple's future in the market is uncertain. Facing public scrutiny will certainly not bode well for the company and the release of new products, but The Wall Street Journal says it may be time to sell Apple shares for other reasons as well. Apple's iPhone is said to be so popular just because it works, but with incredibly high records already set by previous generations, the iPhone 5 may not have what it takes to beat those that preceded it. The Wall Street Journal says that if Apple sticks with the iPhone's traditional design, then that could present a problem because competitors such as Nokia NOK will continue to introduce new features in order to get a leg up. Whether this prompts investors to ditch shares following tomorrow's event remains to be seen. However, despite Apple's ever-increasing competition and the many the company faces, analysts are still highly confident that the iPhone 5 launch will be a huge success. "We believe Apple will unveil the iPhone 5 on September 12," Jefferies mentioned in a report on Tuesday morning. "We still see numerous catalysts for the shares to perform well over the next couple months and the next year." Apple closed on Monday at $662.74, down about 2.6 percent for the day. Year-to-date, the company is trading up nearly 64 percent.