The 16-year-old was an apprentice with Dresser Mouldings (Rochdale) and was working alongside an experienced colleague on a moulding machine when the incident happened on 23 July 2014.
Trafford Magistrates' Court heard that the teenager had been working alongside a colleague on the machine at the company's Station Yard Sawmill, when a piece of wood jammed and would not feed through properly.
The machine was opened to try to rectify the problem. The teenage apprentice was looking inside and trying to help adjust the machine when his gloved right hand caught on the rotating central blade.
His right hand was severely injured, and he lost the entire middle finger and part of the thumb.
An investigation by the Health and Safety Executive found that company had failed to effectively prevent access to the dangerous parts of the machinery.
Dresser Mouldings (Rochdale), of Station Yard Sawmill, Wood Street, Rochdale, pleaded guilty to breaching Section 2(1) of the Health and Safety at Work etc Act 1974.
HSE inspector Emily Osborne, said: "This incident could have been easily prevented if the company had suitable measures in place to ensure workers did not come into contact with the rotating blade on the machine. In this case the machine should have been switched off.
"There was no safe system of work in place for the task as well as a lack of instructions and training to ensure workers knew how to carry out the task safely.
"Instead, the firm's failures led to a young worker suffering a severe injury, losing a finger and part of his thumb."