Apple Supply Chain: When you have as much power as Apple Inc. (NASDAQ:AAPL) you don’t have to worry about much. Sure, the company has gone through a rough patch as of late, but it is safe to say that things will blow over sooner rather than later.
Of course, this may not be the case if Apple continues to receive shoddy products from its manufacturers.
Nobody expects to pay for a poorly manufactured product, and this is definitely true when your name is Apple Inc. (NASDAQ:AAPL). Unfortunately for the tech giant, it appears that things have gone from bad to worse over the last couple of days.
It is being reported by China Business that Foxconn botched a recent production run of iPhones.
What did Apple do about this? Just what you expected a company like this to do. They sent the smartphones back to Foxconn because they are not suitable for sale.
Before we go any further, it is nice to note that Apple Inc. (NASDAQ:AAPL) decided to send the phones back as opposed to ship them to consumers and hope for the best. Of course, the problems with the batch were likely severe.
The Register translated the piece, and realized that Apple sent back at least five million iPhones to Foxconn.
Take a closer look at that number. For a company that has had supply chain issues over the past few months, this is not the type of thing you want to be facing. In fact, this could be just about the worst that could happen to Apple at this time.
If you think things are bad for Apple Inc. (NASDAQ:AAPL), imagine being the person in charge at Foxconn. Not only does this mean you have angered your number one client, but you are going to take a huge financial hit.
The cost of manufacturing an iPhone is roughly $200. If Apple truly sent back five million phones, you can do the math. Foxconn is out quite a bit of money.
Nobody knows for sure what exactly happened or which model failed to meet Apple Inc. (NASDAQ:AAPL)’s standards. All we do know is that Cupertino is not happy and Foxconn has lost a sizable amount of money.
It will be interesting to see if more news is presented on this subject in the near future, or if it is swept under the rug. Along with this, we should be paying close attention to whether or not it leads to supply issues for Apple Inc. (NASDAQ:AAPL).
DISCLOSURE: I have no positions in any stock mentioned.
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