Apple is believed to have rejected millions of iPhone devices, returning them to manufacturer Foxconn citing quality concerns.
China Business reports that the US firm rejected between five and eight million iPhone handsets "due to appearance of substandard or dysfunctional problems."
Whilst it remains unknown which model iPhones were returned, the news is likely to have significant impacts for both companies.
The report estimates that Foxconn could take a loss of around $1.6 billion over the issue. Meanwhile, the sheer number of devices returned by Apple is almost certain to have an affect on the firm's iPhone stock levels.
This isn't the first time that Foxconn has found itself in hot water with Apple. Following the release of the iPhone 5, a number of customers opted to return their handsets, complaining of scratches on devices just removed from the box.