Massive fraud has been discovered at Foxconn, the subcontractor that manufactures Apple’s iPhones. Employees are said to have sold millions of defective spare parts originally intended for destruction. The proceeds from these sales are estimated at € 39 million.
Apple entrusts the manufacturing of its products to subcontractors. The best known of them is Foxconn, which is the target of surveys on the working conditions of its employees and on the work of miners , especially in the second half of each year during which the Taiwanese firm runs at full speed its factory. from Zhengzhou. In this factory, millions of smartphones are produced every month.
Foxconn’s role is twofold: assemble the iPhones and receive the spare parts ordered by Apple. The latter are tested in order to verify their conformity according to the specifications of Apple. And if they have a defect, it is intended for destruction. Between 3% and 5% of the spare parts are considered unacceptable and are destroyed.
Only, some of these defective parts got lost along the way and served to fuel an unscrupulous parallel black market. An investigation by an Asian magazine reveals this affair, which has been going on for at least two years. Spare parts traffic is organized by Foxconn employees and managers of an electronic waste recovery company. One of his participants, presented as a Taiwanese businessman, reveals the whole affair to the Chinese press.
Fraud that brought in 39 million euros
It all started three years ago when the case with hull spare parts, whether the mineral glass protection at the front or at the rear. At the start, 300,000 pieces were stolen . The witness explained that the structural parts are the easiest to resell because they do not operate the phone. And in the event of a lack of stock, employees even engaged in sabotage to increase the number of defective parts.
Three years later, almost millions of spare parts were stolen and sold. Sales amount to 1.3 billion Taiwan dollars , or just under 39 million euros. But that would represent a loss of turnover for Apple of 3 billion dollars in terms of after-sales service (service at the Genius Bar for example).
In conflict with his partners, the witness allegedly disclosed the case to Apple (and even directly to Tim Cook) who opened an investigation through its “Business Assurance & Audit” division. A Foxconn spokesperson says he demands that all of his employees respect work ethics. However, since the case concerns a subcontractor of the subcontractor, responsibilities will not be easy to establish.