Anonymous whistleblower reveals $43million fraud scheme at Apple assembly partner Foxconn’s biggest iPhone factory in China that ‘sold more than 300,000 bootleg phones made from defective parts’
- Some workers at Foxconn were involved in a bootleg iPhone scheme
- They used defective components to assemble phones to sell on the black market
- Between three and five percent of iPhone components are deemed defective
Workers at Foxconn’s biggest iPhone assembly plant in China were allegedly running an illegal side business selling bootleg phones made from defective components that would otherwise have been destroyed.
The scheme is believed to have generated an estimated $43million over the course of more than two years.
Local reports say an estimated 300,000 units were sold during the scheme, including iPhone 8, iPhone 8 Plus, and iPhone X models.
New reports allege workers at Foxconn’s largest iPhone factory in China ran a scheme to sell bootleg phones assembled from defective components that failed quality control
According to a report from Taiwan News, some of the components involved were rear panels, cases, and sapphire glass covering the iPhone camera housings.
Typically between three and five percent of the components produced at Foxconn end up failing quality control, but the co-conspirators decided to try and repurpose these components for their own profit.
The scheme came to light when one of its former participants, a Taiwanese businessman referred to as Mr. X in local media reports, fell out with his partners in Zhengzhou.
Mr. X says he contacted Apple to alert them of the scheme.
Mr. X shared emails he received in return, saying his letter had been forwarded to Apple’s Business Assurance & Audit team, which is currently investigating the matter.
The scheme ran for more than two years and sold more than 300,000 illegal iPhones according to a Taiwanese businessman who goes by the pseudonym Mr. X
Foxconn’s manufacturing facility in Zhengzhou employs as many as 350,000 people on the outskirts of a city of more than 9 million.
The factory produces around half of the world’s iPhone supply each year, or around 500,000 units a day.
The Zhengzhou complex was built in 2010, and has earned the nickname ‘iPhone City’ for its high volume production.
According to one report, a worker at the facility reported handling as many as 1,700 iPhones over the course of a twelve hour shift, or around three a minute.