ICE Raid on Samsung Repair Contractor Shows Big Tech’s Reliance on Exploitative Labor

CVE Technology Group, a Texas-based electronics repair company that was the target of the largest workplace raid by the US Immigrations and Customs Enforcement in a decade, is a major subcontractor of Samsung, the largest smartphone manufacturer in the world. The relationship between CVE and Samsung is so close that, for years, Samsung engineers were always present in CVE facilities, according to court documents obtained by Motherboard.

The raid, in which ICE detained more than 280 people suspected of being undocumented immigrants, demonstrates the degree to which big tech companies rely on cheap and exploitative labor within the United States for "authorized" repair and refurbishing programs. ICE accused CVE of systematically falsifying immigration paperwork for some of its employees.

CVE is a defendant in an unrelated, ongoing lawsuit that alleges that CVE took part in a phone counterfeiting operation alongside former Samsung employees and a third company. CVE is fighting that lawsuit, but its court filings in that case confirm its relationships with Samsung-the largest smartphone manufacturer in the world-as well as US telecoms AT&T and T-Mobile.

According to a filing by a third party that CVE's lawyers later confirmed to the court, CVE "operates the largest Samsung private service center in the United States providing warranty repairs and device assembly for Samsung devices sold by T-Mobile and AT&T."

This means that phones purchased from T-Mobile or AT&T that break and are returned to the carrier are shipped to a CVE facility to be fixed and reassembled.

Major tech manufacturers cannot be unlinked from CVE's apparent business model of using exploitative labor.

Companies like Samsung and Apple try to control as much of the repair, aftermarket, refurbishing, and end-of-life of their devices as is possible. These companies authorize repair only for a few closely-vetted outfits. Rather than making it easy for small, independent companies to repair devices by selling them parts, manufacturers restrict access to those parts. The result is a centralized model in which any phone that requires anything more difficult to fix than a screen or battery replacement is shipped back to a manufacturer-vetted facility like CVE.

"The business of authorized repair is heavily reliant on low-cost subcontract labor," Gay Gordon-Byrne, executive director of the Repair Association, a group that is pushing for legislation that would require manufacturers to make repair easier for independent companies, told me. "The work is repetitive, boring and pretty low skill. Parts are cheap-labor is the only real cost, and shipping."

This close relationship between Samsung and CVE is confirmed in the court filings. CVE's lawyers state that "CVE's employees are trained and instructed by Samsung with a Samsung supervisor/engineer present at CVE's facility at all times, such that the mobile devices CVE assembled are genuine Samsung products and are not counterfeit."

CVE also said that Samsung provided the company with specific serial numbers for each phone that it assembled, and said that it was a "private service center" for Samsung between 2010 and 2015. The company said that after 2015, "Samsung continues its working relationship with CVE, including using CVE as an Authorized Service Center for certain Samsung devices."

An archived version of CVE's website has a Samsung Galaxy phone on its home page, and the company says it works on cameras, phones, projectors, musical keyboards, game consoles (Xbox 360, PlayStation 3, DS Lite, and Wii), home theater equipment, and a host of other electronics.

An archived version of CVE's website advertises that the company is "the return/repair specialists behind your brand," that the company has "built strong business relationships with a number of major manufacturers," and that clients should "think of CVE as an extension of your company."

This doesn't mean that Samsung knew that CVE was apparently relying on undocumented labor. But manufacturers prefer to do this work in bulk, in places where labor is cheap. The raid again exposes the fact that our expensive electronics are often made-and then repaired, recycled, or disposed of-by underpaid people often working in dangerous conditions. Investigation after investigation shows that our electronics supply chain and life cycle is full of labor exploitation, from the raw copper and cobalt mining in places like Bolivia and Congo to the grueling, repetitive assembly work in Shenzhen to the repair in facilities like CVE, fire-prone e-waste recycling facilities around the US, and electronics scrapping in junkyards in Hong Kong and Ghana-our electronics supply chain and life cycle is full of labor exploitation.

"Every [electronics manufacturer] dealing in quantities of returned goods, including retail returns, is aggregating batches of similar equipment to ship in bulk to subcontractors pretty much anywhere they can get the best deal on labor," Gordon-Byrne said.

In 2014, CVE relocated its headquarters from Riverdale, New Jersey (where it still has an office), to the Allen, Texas site that was raided Thursday. At the time, a CVE executive said that the area "is the epicenter of cell phone growth and activity"all of the top carriers along with all of the top OEMs are here in the DFW Metroplex. Even if their headquarters are located elsewhere, their hubs and inventory most definitely are here."

The city was banking on CVE to be a major employer in the area: "Allen is focused on helping businesses expand and relocate here in order to drive the growth of our employment base," Allen Economic Development Corporation Executive Director Dan Bowman said at the time. "At full employment, CVE is expected to rank among our largest employers in Allen."

A call to CVE by Motherboard went unreturned, but a phone tree allowed customers to leave messages about Samsung warranty repairs for both smartphones and tablets, indicating that its work with Samsung is ongoing. Samsung did not respond to a request for comment from Motherboard.

AT&T told Motherboard in an email that it "expect[s] our vendors to comply with the law, and we no longer work with this vendor." T-Mobile did not provide a statement in time for publication, and All Pro did not respond to a request for comment.