Apple rejects eight million faulty iPhones

iphoneTo make one faulty iPhone is unfortunate. To make eight million faulty iPhones would appear to be somewhere beyond careless.

Insiders at controversial component manufacturer Foxconn are reported to have said the firm will pay a heavy price after Apple rejected of batch of between five and eight million iPhones (and what’s three million handsets between friends?)

Details are a little sketchy thanks to a combination of the story coming from anonymous sources and originally being published by China Business in Chinese. As best as tools such as Google Translate can tell us, Foxconn will miss out on payments of around $200 for each handset, putting it on the hook for between $1 billion and $1.6 billion. It’s difficult to be entirely sure thanks to the translation issue, but the article appears to suggest Foxconn will have to pay a considerably higher amount to Apple as compensation.

The technical issue is described solely as “the appearance of non-compliant or dysfunction problems..”

There’s no word on which handset (assuming the batch was all of the same model) was affected. The Register notes it’s the equivalent of two to three weeks total production of the iPhone: possibly longer during the quieter spring period.

Foxconn has previously complained that the iPhone was particularly difficult to assemble, though that talk has died down since last year. That could suggest the faulty batch was a spectacular screw-up.

Alternatively it could be problems with a future model (likely the 5S), though if it’s a developmental teething problem, eight million handsets seems like a hell of a lot to make in one go without being certain you’ve got any problems sorted out. Apple Insider notes prior speculations that Apple would struggle to fix interference problems with a proposed fingerprint sensor on the new model.

Foxconn — which gets about 70 percent of its revenue from Apple — recently announced a 19 percent drop in revenue for January through March this year. It blamed the drop in a decline in orders for iPhone. It’s not yet clear whether those figures take account of the reported rejection of the faulty handsets.

There’s also a mystery the China Business article doesn’t address: exactly what happens to eight million faulty smartphones?

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