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Apple returned 5-8 million iPhones to Foxconn due to poor quality issues

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According to China Business (via The Register):

“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.”

If the story is true, then it could mean bad news for both Apple, Foxconn and their cooperation. Take into consideration that each device has around $200 manufacturing cost, do the math and you'll find that Foxconn has to lose almost a billion dollars to cover the bad batch of smartphones, not to mention Apple that will surely face a short iPhone supply! Truth is that Foxconn has been having problems with iPhone 5 production from the beginning. There’s been several reports of quality control issues since the handset launched last fall, with many consumers complaining of scratches—particularly on black models (who can forget about them?).

It will be interesting to see what effects, if any, this has on Apple's future decisions. Could the ongoing production issues cause the company to rethink the design of its next-gen handset? What do you think?

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