Wow. If the rumors are true, this could represent an epic electronic supply-chain fail.
Multiple publications, including two translated from the original Chinese (the China Times and China Business), are reporting that Apple has returned 5 to 8 million iPhones to Foxconn for unknown manufacturing defects.
The reports indicate that the repairs will cost Foxconn about 200 yuan, or $32, per device, which could add up to as much as $259 million in repair costs. By contrast, one of the biggest electronics repair issues in the early 1990s — Intel's floating-point divide bug problem — cost the microprocessor giant about $400 million in charges.
It's not known what model or models of iPhones are affected. According to MacRumors:
The iPhone 5 suffered from quality control issues following its launch, with a number of customers complaining of scratches and other issues with their devices even right out of the box. Foxconn executives acknowledged that the iPhone 5 was a difficult device to assemble, with increased quality control standards contributing to production output below the company's goals.
The Register reports that “the impact of 8 million phones failing to appear would punch a two- or three-week hold in Apple's supply chain.
A separate report from Business Insider Australia quotes Barclays analysts as saying Apple is losing some key, trusted executives at Foxconn.