The reason why Apple is reportedly sending back 5 million to 8 million faulty iPhone 5 devices is because the workmanship quality by Foxconn fell below the agreed upon 90 percent standard, according to a report from China.
Citing an unnamed source, NanDu Daily reported Tuesday Foxconn had agreed the quality rate of iPhone 5 devices produced by the company had to 90 percent or above. However, because of the complexity of the manufacturing process, the quality hovered at only 80 percent for a portion of the devices produced and it has to bear the cost for fixing the faulty handsets, the source, who has close connections with the supply of iPhone parts in China, stated.
The 5 million to 8 million faulty iPhone 5 devices mentioned by other Chinese news agencies earlier this week should be the accumulated amount following the phone's launch in September last year, the source added.
A spokesperson from Foxconn's parent company, Hon Hai, denied the report however.
"It's not true. There is no such incident where 5 million iPhones were returned to Foxconn, and thus we don't have to pay billions of yuan. The quality rate is at [a] normal level. But we are very cautious when making the figure public, as it will affect the customer," the spokesperson explained.
Foxconn may end up spending up to 1.6 billion yuan (US$256.8 million) to replace as many as 8 million pieces of faulty iPhones, if reports of poor quality work are true.