Have you ever bought a new phone and realized it's broken, having to return it and causing you inconvenience? Apple gets returns from customers, but now it's had to do some returns of its own. The Taiwanese manufacturer, Foxconn, who supplies Apple with its iPhone 5 devices, has received between 5 and 8 million iPhones back from Apple with a complaint concerning sub-standard manufacturing quality.
The agreement between Apple and its outsourced manufacturer allegedly states that a 90 percent quality rate is required (meaning only 1 out of 10 iPhones are allowed to be broken). However, Foxconn has only been able to achieve an 80 percent quality rating; therefore, they are having to refund Apple for all the sub-standard phones. As each phone has an estimate labor cost of around $200 USD, Foxconn is losing around 1.6 billion Yaun ($257 million USD) in revenue to fix the iPhones for Apple.
This news, together with the fact that Foxconn has recently declared its worst revenue statistics in over ten years, could mean that Foxconn might not be Apple's preferred manufacturer for much longer. With a speculated launch of a new iPhone 5S or iPhone 6 coming out, we hope that problems associated with the iPhone 5, such a light leaking between the screen and antennae and the use of substandard aluminum, will not be present on the release of Apple's next big phone.