Foxconn is in a big deal. On the morning of December 19, Apple is investigating a suspected fraud case by some Foxconn managers. They used unqualified iPhone parts to assemble iPhone for sale. The amount involved in three years reached as high as US$42 million (about 300 million yuan). This is also one of the largest iPhone black industry cases involved. 
Taiwan media reported that Foxconn executives stole iPhone parts and made tens of millions of
Taiwan media reported that a Taiwanese businessman revealed that his team had worked with senior mainland cadres from Foxconn Zhengzhou factory for more than two years to buy defective iPhone components that should have been destroyed at a low price. After simple processing, it was resold in the name of the original good products. Foxconn was suspected of stealing iPhone components. Not only did Apple lose nearly 3 billion US dollars a year, but it was also likely to severely damage the image of Hon Hai Group .
The whistleblower said, "Our team is already operating the hardware scrap business in the electronics industry. The factory's production line is inevitably flawed and defective. Generally, the normal scrapping ratio is about 3% to 5%. We will dispose of these scraps and resell them for a year."
This Taiwanese businessman had a quarrel with mainland cadres for some reason in February this year. After returning to Taiwan, he first complained to Foxconn's parent company Hon Hai , but received no response. He then turned to Apple Corporation and sent an email to the mailbox of Apple Corporation and CEO Cook (Tim Cook).
In the letter of complaint sent to Cook, he wrote: "In order to collect evidence, I spent a lot of time and arranged for secret personnel to enter Foxconn. In the past few years, many mobile phone components that have leaked out of the market have been acquired, which has seriously affected Apple's rights and losses of nearly US$3 billion per year."
According to the Taiwanese businessman who broke the news, when he went to the Zhengzhou factory to watch the goods, the factory staff would ask them to turn off their phones. Once he took the opportunity to secretly take a video of inspecting goods in the factory. From the video in just a few seconds, we can see that there are ten cartons on a pallet. How do both parties pick up the goods outside? "We placed the order after watching the goods, and called the truck the next day. Both parties made an appointment to pick up the goods in a private house outside the factory. After inspection, they directly paid cash to the person who was on the connector. Then we sold these parts to fixed-fitting dealers, and finally sold them to the whole mainland and indirectly to Taiwan."
He cited the latest iPhone XR as an example. Most of the related components were assembled at the Foxconn Zhengzhou factory, with a yield of about 93%, which means there are 7% of bad products. According to regulations, these bad products must be destroyed, but his team has the means to obtain undestroyed bad products. After simple sorting, they can be turned into good products and resold for profit.
From July 2016 to February this year, his team has made a profit of RMB 300 million (about NT$1.3 billion) from the goods obtained from Foxconn's Zhengzhou factory.
Cook ordered an investigation
After learning about this, Apple attached great importance to it. Cook has asked the Asian auditing unit to conduct a thorough investigation. Once it is verified, it may damage the image of Hon Hai Group.
Apple's reply stated that CEO Tim Cook has handed over the report letter to the Asian auditing unit for investigation.
An email showed that the investigation was led by Apple's Commercial Assurance and Audit (BAA) team, which reported directly to the company's board of directors.
The iPhone has always been the center of many fraud cases because of its high price. Previously, some criminal gangs were suspected of using counterfeit iPhones to exchange for authentic products in Apple’s customer service, which caused more than $6 million in losses to Apple.
Guo Taiming responded to
Honghai Group issued two statements in a row on the evening of December 18 local time, emphasizing that the rumors that the group had an insider caused a customer to lose $3 billion in annual losses was completely false, and the right to legal prosecution will be reserved for the whistleblower.
Foun Hai emphasized that in addition to launching a verification mechanism for the relevant reports, relevant units have been requested to investigate, but for the whistleblowers' attempt to crack down on the image of the group, in order to safeguard shareholders' rights and the company's goodwill, the company will also reserve the right of legal prosecution against the whistleblowers.
When Hon Hai founder Terry Gou attended an event on the 18th, he responded to the media's inquiries about Foxconn's stealing and selling parts. He said, "I don't know, I just read a lot of reports." He said that he no longer operates it now, which is also the responsibility that operators must bear. Any company with a considerable production volume will inevitably have unreasonable things happening to 1 to 2 people in one million employees, and everything will be handled in accordance with the law.
iPhone sold 1.4 billion said that according to Apple’s official data, Apple has sold at least 1.4 billion iPhones in the past decade. With this year's sales, it is expected to reach about 1.6 billion units. The past 10 years that can be regarded as the iPhone, iPhone has driven Apple from a profitable company with a market value of $1 trillion.
