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Friday, July 30, 2021

How the biggest iPhone maker fooled Apple

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The largest equipment manufacturer for Apple, Taiwanese company Foxconn, has been accused of deceiving its main customer and increasing its revenue.

The cooperation between Apple and one of its largest partners in China, Foxconn, is in danger, according to the sources.

According to reports, dissatisfied with its financial performance, the Taiwanese company misled Apple several times, resorting to unfair ways to increase profits.

For example, Foxconn regularly asked Apple to increase the number of employees to conduct quality tests on its products, but in the end, it hired fewer employees than indicated in official documents. In this way, the Taiwanese manufacturer received more money for its expenses.

In addition to the fraud associated with the number of employees, Foxconn was caught conducting an unauthorized tour for Google employees. Apple accuses its Chinese partner of bringing employees from a rival company to the factory where the metal frame of a 12-inch MacBook was manufactured. Apple requested surveillance camera footage and factory visit logs, but the data was never provided.

Foxconn was also seen using radio frequency equipment purchased by Apple to test Huawei phones.

In addition, the Taiwanese manufacturer even tries to optimize the manufacturing process of Apple equipment, reducing its costs. Instead of recycling the defective models, it fixed them and shipped them to Apple under the guise of being brand new.

To make more profit, Foxconn tried to sell its own equipment to manufacture and test components. It even developed its own chemicals to polish the iPhone screen.

Possible consequences

According to MacRumors, Foxconn produces between 60% and 70% of the world’s total volume of iPhones. 

At the same time, Apple is the company’s largest customer, so the deterioration of relationships between partners is undesirable for both parties.

Meanwhile, it is known that in recent years Apple has been expanding its production outside of China. For example, in India there is a factory that produces iPhone smartphones, which are then exported to European countries. However, even this Indian factory belongs to Foxconn.

Overall, Apple plans to move up to 30% of its production out of China in the coming years to diversify the geography of production, but cooperation with Foxconn will not be affected, according to the experts.

The experts believe that production in India gives Apple a number of advantages. Among them are cheaper labor and lower taxes on imports into the country.

The expert believes that the association between the two companies is not threatened so far, and the possible conflict can be resolved at the level of the review of the agreement.

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