Foxconn reportedly paid millions to Apple for faulty goods
Staff Reporter 2013-04-23 17:10
An iPhone 5 at an Apple store in Hong Kong. (Photo/Chen Hsiao-wei)
Foxconn Technology Group paid millions of renminbi to Apple in 2010 to compensate for shipping substandard products, and the manufacturer may be forced to make up for another batch of substandard phones, the Chinese-language newspaper Securities Daily reported on Tuesday.
Citing sources close to the matter, the daily said Foxconn — the trade name of the world's largest contract electronics maker Hon Hai Precision Industry — paid 800 million yuan (US$129 million) to its client Apple in August 2010 after supplying products whose quality did not meet the American company's standards.
The daily said Foxconn was expanding so fast that management had likely failed to keep its quality control measures in place. The company defended its management in an interview with the paper, saying that as the world's largest manufacturer of consumer electronics, it had stringent management controls and quality checks.
Analysts said there is a small possibility that Apple may take on a larger role in the supervision of its goods' production if Foxconn did not improve its record.
Chinese media sources have reported that Apple has recently sent back more than 5 million iPhones to Foxconn for re-assembly on March 15, citing defects in appearance and functionality. The rejection reportedly prompted Foxconn chairman Terry Gou to inspect the company's plant in Shenzhen last Tuesday, according to the reports.
The incident will reportedly cost Foxconn 1 billion yuan (US$162 million), adding new troubles to a company which saw a revenue decline of 19.21% in the first quarter of this year.
