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Report: Apple returned 8M shoddy iPhones to Foxconn

Manufacturer feeling financial pain after botching a batch

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Foxconn has apparently botched a batch of iPhones, which Apple returned to the contract manufacturer because they were not fit for sale.

Details of just what went wrong are sketchy, as the source for this tale is an anonymous Foxconn staffer chatting to China Business. That report, after being forced through a couple of translation engines, suggests Apple sent back at least five million iPhones, and maybe as many as eight million, “due to appearance of substandard or dysfunctional problems.”

With a cost to manufacture of $US200 apiece, Foxconn is apparently preparing to take a hit of up to $1.6bn to cover the cost of making replacement handsets. China Business suggests the cost of making new iPhones represents further bad news, not a reason for Foxconn's recently-revealed financial woes.

China Business is silent on which model of iPhone failed Apple's quality tests. If it's the current iPhone 5, or the still-on-sale 4S, the impact of eight million phones failing to appear would punch a two-or-three-week hole in Apple's supply chain, an assertion we make on the basis that the company says it sold 47.8m handsets in its last quarter. That quarter included Christmas, so we can safely assume the January-March quarter sees a little less handset-selling action.

If the botched phone is a newer-and-as-yet-unreleased handset, it could be grounds for a delay in its announcement or release. ®

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