Apple has rejected around 5-8 million iPhones from Foxconn because of quality issues, according to China Business. Apple is reportedly not paying for those phones so Foxconn will be absorbing the costs.
Foxconn may have to pay around 200 yuan ($32 U.S.) per device, which could cost as much as 1.6 billion yuan ($259 million). The report is unclear about which iPhone models were affected, but it is likely that it was the iPhone 5 or upcoming iPhone 5S model.
When the iPhone 5 was released, several customers complained about scratches and screen abnormalities. Foxconn acknowledged that the iPhone 5 was one of the most difficult devices that they ever assembled.