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Apple Investigate $62m Bootleg iPhone Scheme

An illegal side business at Apple’s biggest iPhone assembly plant, Foxconn has been discovered selling upwards of US$43 million of ‘bootleg phone’ components, in what is becoming a serious issue for major tech brands using manufacturing facilities in Asia.

Believed to be running over the last two years, local Taiwanese reports have estimated a whopping 300,00 units were sold from the bootleg business, which manufactured phones from defective components.

An investigation by the electronics manufacturer Foxconn discovered the alleged fraud after a whistleblower emailed Apple’s Business Assurance & Audit team.

The scheme reportedly involved a Taiwanese businessman working with the staff at the Zhengzhou facility to procure the iPhone components to sell into crime rings who would then assemble the parts into working ‘iPhones’.

A similar operation was discovered early this year, costing Apple more than US$6 million.

Former Foxconn Chairman and Taiwanese billionaire, Terry Gou, was not surprised that ‘unreasonable things may happen to one or two workers’.

The Zhengzhou facility employs around 350,000 people, producing up to 500,000 units per day.

According to one source, workers at the Foxconn facility reportedly handle nearly 2,000 iPhones in a single 12-hour shift, which is roughly three devices a minute.

Foxconn will now implement changes to address the issue, including an internal investigation into the alleged misconduct.

Apple’s Business Assurance & Audit team is also currently investigating the situation.

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