Apple Returns 8 Million Defective iPhones To Foxconn

Apple Inc. have reported that they have returned 5 to 8 Million iPhones back to Foxconn as they were unfit to sell. A batch of those units were returned due to ‘appearance of non-compliant or dysfunctional problems. Each iPhones carry a manufacturing price tag of $200 and to make it worse, depending on the model the repairability of the device is extremely difficult which will be one of the main reasons for a significant cost increase.

The report didn’t specify which iPhone model, but this would make Foxconn profits to go back as high as $1 Billion to $1.6 Billion by providing replacement units. But it was pointed out easier that returned iPhone 5 and 4S would slow down Apple’s supply chain, but won’t affect the brand. The massive returns however was an unforeseen circumstances, which may force Apple to delay the announcement of its newer devices. Foxconn takes a bigger hit as it was reported earlier that lesser demands of Foxconn did not earn them similar profit numbers as before as there was a sharp 19% decline in sales compared to last year.

Printed media ‘China Business’ mentioned in their paper:

Apple has returned over 800 million [Typo on the newspaper] iPhone units as faulty, and this could be a huge loss for Foxconn that can amount up to US$ 256.8 million. Foxconn would now have to re-manufacture the returned phones incurring further labour expenses that can add up the production prices. The company would be required to replace the faulty parts with working ones. This has not been the first time that such a major production problem has happened with Apple iPhones. Foxconn has been one of the top manufacturers for Apple iPhones and other top mobiles. The total estimated cost for replacing over 8 million faulty phones could be around 1.6 billion Yuan that is about US$256.8 million.

Foxconn only said,”Foxconn follows a strict policy of not commenting on specific customers or products that we produce.”

Source: Forbes