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Foxconn Technology Group, Taiwan-based owner of the manufacturer Hongfujin Precision Industry Co and the Chinese newspaper China Business News issued a joint statement saying the two sides had resolved the dispute after apologising to each other "for the disturbances brought to both of them by the lawsuit".
The statement, posted on Foxconn's website, said each side had expressed respect for the other. Hongfujin said it recognised the right of media in overseeing corporate behaviour, while the newspaper expressed its recognition of the company's contribution to China's economic development and competitiveness.
The two sides agreed to work together to protect workers' rights, it said.
Last week, amid a wave of bad publicity, Apple Computer announced it was trying to resolve a controversy over the lawsuit filed in a Shenzhen court by Hongfujin against two journalists who wrote a story criticising treatment of workers on its iPod assembly lines.
Local and international media groups criticised Hongfujin's demand for 30m yuan ($3.8m) in damages as well as the local court's agreement to freeze the personal assets of the two journalists at the China Business News, reporter Wang You and editor Weng Bao.
Hongfujin subsequently reduced its demand for damages to a token 1 yuan (12 US cents), and the local government announced it had ordered the company to set up a state-sanctioned labour union at the factory.
The company was reportedly China's biggest export manufacturer last year with overseas sales totaling US$14.5bn.
The allegations about Hongfujin's labour conditions first surfaced in an article in the British newspaper The Mail which reported in June that workers were being paid below minimum wages and forced to work 15-hour days making the iconic iPods.
Cupertino, California-based Apple responded by promising to immediately investigate conditions at the factory. It issued a report earlier this month saying that it found some violations of its stringent code of conduct but no serious labour abuses.
It pledged to immediately redress some problems with overtime, employee accommodations and administrative issues.
The factory, which also supplies electronics components and accessories to other major companies such as Dell and Intel, is a small city in its own right, with clinics, recreational facilities, buses and 13 restaurants serving its 200 000 workers, Apple's report said.
The report discounted allegations of forced overtime, noting that a chief complaint among workers was a shortage of overtime during slack periods.
