Scammers sold 300,000 iPhones made using defective parts from a Foxconn factory

[ryao]

https://www.patentlyapple.com/patently-apple/2019/12/taiwans-mr-x-worked-with-foxconn-plant-managers-to-purchase-defective-iphone-parts-illegally-and-made-a-killing.html
 

Apple reportedly started an investigation after being tipped off by the one the guys involved in the scheme after running it for 3 years. It seems like he just handed Apple a gift against the right to repair guys. Also, I wonder why Apple did not start this investigation when Strange Parts showed how readily available parts were in China on YouTube:

 

I watched the videos about how a fairly recent for the time iPhone was produced using nothing but spare parts when they were new. Things that could not be fabricated outside of Apple’s supply chain such as complete logic boards containing Apple’s SoC were in such an abundance that it should have been a sign that a factory somewhere might have been leaking them, but Apple seems to have ignored that.

 

Edit: Another video showing where some of the defective phone parts from the factory might have ended up:

 

 

[Jumballi]

iPhones aren’t necessarily special parts, they just force chinese companies to exclusively make them a part, which those companies obviously don’t. Like 99% of an iphone could be considered off the shelf, if the shelf was heavily regulated and only used on one device realistically.

[ryao]

19 minutes ago, Jumballi said:

iPhones aren’t necessarily special parts, they just force chinese companies to exclusively make them a part, which those companies obviously don’t. Like 99% of an iphone could be considered off the shelf, if the shelf was heavily regulated and only used on one device realistically.

What is off the shelf about the iPhone’s proprietary logic boards containing Apple designed chips or parts made according to Apple’s exact specifications that were not being sold prior to Apple ordering them?

 

You could try looking at individual chips, but the spare parts being sold for iPhone repair or being used to fabricate iPhones by third parties for the most part do not touch the individual chips.

 

Just look at an ifixit teardown:

 

https://www.ifixit.com/News/iphone-11-teardown

 

There is very little that looks off the shelf. Even the parts that ought to be generic (like the battery) look like made to order versions. Apple did not just grab a battery that was being sold generically, but instead ordered one made to custom dimensions with its own markings plus other features like the chip that allows the battery to authenticate itself with the iPhone. At the very least, I have not heard of batteries with such functionality being used in anything other than an iPhone, so they are clearly not off the shelf.

 

To give another example, the camera should have a third party sensor that is sold to everyone, but the way the module is built is custom for the iPhone’s internals. The sapphire crystal used for the lens was a world first in a cellphone as far as I know. Apple clearly did not design the internals around an off the shelf camera module, such that it is a made to order part at the very least.

[Jumballi]

29 minutes ago, ryao said:

What is off the shelf about the iPhone’s proprietary logic boards containing Apple designed chips or parts made according to Apple’s exact specifications that were not being sold prior to Apple ordering them?

 

You could try looking at individual chips, but the spare parts being sold for iPhone repair or being used to fabricate iPhones by third parties for the most part do not touch the individual chips.

 

Just look at an ifixit teardown:

 

https://www.ifixit.com/News/iphone-11-teardown

 

There is very little that looks off the shelf. Even the parts that ought to be generic (like the battery) look like made to order versions. Apple did not just grab a battery that was being sold generically, but instead ordered one made to custom dimensions with its own markings plus other features like the chip that allows the battery to authenticate itself with the iPhone. At the very least, I have not heard of batteries with such functionality being used in anything other than an iPhone, so they are clearly not off the shelf.

 

To give another example, the camera should have a third party sensor that is sold to everyone, but the way the module is built is custom for the iPhone’s internals. The sapphire crystal used for the lens was a world first in a cellphone as far as I know. Apple clearly did not design the internals around an off the shelf camera module, such that it is a made to order part at the very least.

We react to these parts as being proprietary, but the sensor is still made by sony, the glass is still made by foxcon, and the capacitors and resistors have to come from somewhere. The iphone, as well as as all phones are made up of third party parts, and then they try to get us consumers from getting access to them.

[ryao]

21 minutes ago, Jumballi said:

We react to these parts as being proprietary, but the sensor is still made by sony, the glass is still made by foxcon, and the capacitors and resistors have to come from somewhere. The iphone, as well as as all phones are made up of third party parts, and then they try to get us consumers from getting access to them.

The glass is made by Corning, not Foxconn. The camera sapphire is made by another company. I do not know which.

 

That being said, things like a completed logic board made to order for Apple with chips made according to Apple’s chip designs are not on the same level as resistors and capacitors. I doubt anyone has ever needed to replace a camera sensor unless they exposed it to a laser and if they did, they certainly did not replace the actual sensor by itself.

 

All of this misses the point that >300,000 people got scammed by substandard parts (not board level components) that were assembled to make complete phones. Presumably, others got third party repairs using defective “genuine” parts too.

[Kisai]

2 hours ago, ryao said:

https://www.patentlyapple.com/patently-apple/2019/12/taiwans-mr-x-worked-with-foxconn-plant-managers-to-purchase-defective-iphone-parts-illegally-and-made-a-killing.html
 

Apple reportedly started an investigation after being tipped off by the one the guys involved in the scheme after running it for 3 years. It seems like he just handed Apple a gift against the right to repair guys. Also, I wonder why Apple did not start this investigation when Strange Parts showed how readily available parts were in China on YouTube:

 

 

So basically Counterfeit iPhones made from Factory defects. 

 

Reminds me of how how counterfeit sellers try to pawn off "one-off" 's from factories back before the internet made it easier to sell fake stuff to people who care more about the brand than the function. Seriously, most of the LVMH stuff you see out there is fake.

 

Unlike clothing however, electronics can't simply have a tear patched or scuff buffed out of it. Either it works, or it doesn't. Get enough defective parts where the only thing defective is cosmetic, then you can probably dupe stupid people into buying them. 

 

And yes, the entire "right to repair" argument flies in the face of this. If Apple and various other companies had their way, you would not be able to assemble their devices entirely from spare parts bought off the internet. We've always had a means to solve this without turning devices into disposable garbage too. Individual serial numbers, logistics tracking, this is the entire thing blockchain was designed to combat. To activate a device, the device would need to be connected to WiFi, USB, or have a working SIM card. The device would then download a firmware blob that only works on the T2/TPM chip and then ask where each part has been and upload that back to Apple, and then Apple compares the blockchain of each part with the expected and if it matches, device is activated. If it doesn't match, the device gets a "Apple Repair Needed" message and has to be repaired BY Apple, and doesn't permit any GUI software to run other than settings. If a device is repaired with fake parts, it would of course fail the activation check.

 

Now we could have prevented this altogether by having Apple doing swap-only repairs. If you want to fix it yourself, they send you the part to replace it, even out of warranty, you send the part back within 30 days or they charge you 200% of the cost of the part, thus disincentive for "losing" the part to sell on eBay. If the part is defective when they receive it, they charge you the replacement cost only. If the part turns out to not be defective at all, they keep it and you get charged the restocking fee, and it goes into their refurbish spare part stock.

[williamcll]

How would you detect a spare part iphone from a legit model? I've seen iphones with their storage chip changed for larger models and they worked fine.

[ryao]

10 hours ago, williamcll said:

How would you detect a spare part iphone from a legit model? I've seen iphones with their storage chip changed for larger models and they worked fine.

There are phones made out of all manners of parts. The 300,000 mentioned seem to be made out of defective parts that were supposed to be destroyed. The one that Strange Parts made would be a spare parts phone, although it is also possible some of the parts were rejects from the factory.

 

I am not sure if there is any way to tell beyond Apple’s battery warning. I have not heard of anyone finding a way around that yet. A phone made from spare parts or stolen defective parts should trigger that. A genuine phone with a third party battery replacement would also trigger it though.

[TechyBen]

11 hours ago, williamcll said:

How would you detect a spare part iphone from a legit model? I've seen iphones with their storage chip changed for larger models and they worked fine.

Why just why... You know what. I don't care. I'll drop it all and forget it. I'll eat, and not care of this stuff in the end.

[ryao]

35 minutes ago, TechyBen said:

Why just why... You know what. I don't care. I'll drop it all and forget it. I'll eat, and not care of this stuff in the end.

I think the more prudent question would be how could a person detect an iPhone made with defective parts.

[TechyBen]

9 minutes ago, ryao said:

I think the more prudent question would be how could a person detect an iPhone made with defective parts.

Same as normal. Does it work? Does it not? How do you detect a real iPhone that is the 1% in store with defects? (not many companies get above 99% good to failure rates).

[RejZoR]

And people still wonder why Apple is "locking down" batteries and displays so you can't just replace it yourself... And if I'd be in a market for second hand device, I'd also like to know it's genuine and not a cheaply refurbed in someone's garage using crappy cheap parts off eBay/AliExpress and sold to me as pristine iPhone for full price of such pristine used device. But hey, every time talks about this happened I ended up looking like biggest Apple fanboy for defending this. And everyone else was like "but muh repairing of iPhone". Same as people who can barely afford used Mercedes, BMW or Porsche and then use cheapest possible options to stitch it back into somewhat working condition. Don't buy premium brand names if you can't afford their services or parts. It's literally as simple as that. It's the principle and mentality, not fanboys or defending of greedy corporations.

[ryao]

10 minutes ago, TechyBen said:

Same as normal. Does it work? Does it not? How do you detect a real iPhone that is the 1% in store with defects? (not many companies get above 99% good to failure rates).

There are different degrees of working. A network cable in my home has an error rate of 1:400. It went undetected by me for years and the issues it caused were thought by a much younger me to be the result of other things until I finally found the cause. It is very hard to replace and it generally works despite the error rate due to retransmissions, but it is still defective and I would much rather have a good cable in its place.

[TechyBen]

2 minutes ago, ryao said:

There are different degrees of working. A network cable in my home with an error rate of 1:400 went undetected by me for years and the issues it caused were thought by a much younger me to be the result of other things until I finally found the cause. It is very hard to replace and it generally works despite the error rate due to retransmissions, but it is still defective and I would much rather have a good cable in its place.

Yep. But is that due to it being a fake, or just natural wear/imperfections? Give users/repair shops the tools. You can get 99% or so perfection in the factory... but for the rest, give it to users to deal with.

 

Personally, I'd be happy paying half price for a defective screen (dead pixel) INSTEAD of paying full price for one, and not having any recompense for a refund or  choice to even pay twice as much for a guaranteed "no dead pixel" screen. Though in Apples defence, they don't get dead pixels, but they do get other faults, and would rather cut off their nose (no parts ever) to spite their face.

[Rohith_Kumar_Sp]

17 hours ago, ryao said:

It seems like he just handed Apple a gift against the right to repair guys.

if anything they should realize there's a black market becasue they ain't selling the parts like samsung parts.com

[ryao]

24 minutes ago, TechyBen said:

Yep. But is that due to it being a fake, or just natural wear/imperfections? Give users/repair shops the tools. You can get 99% or so perfection in the factory... but for the rest, give it to users to deal with.

 

Personally, I'd be happy paying half price for a defective screen (dead pixel) INSTEAD of paying full price for one, and not having any recompense for a refund or  choice to even pay twice as much for a guaranteed "no dead pixel" screen. Though in Apples defence, they don't get dead pixels, but they do get other faults, and would rather cut off their nose (no parts ever) to spite their face.

Reportedly, Apple has a 93% yield rate on the iPhone X parts (if I recall what I read yesterday) and threw away 7% of the parts due to defects. What the defects are is unclear. Some likely are minor while others could be serious. There should exist defects that look like nothing in an initial inspection, but turn out to be serious down the road, like with my Ethernet cable.

[ryao]

14 minutes ago, Rohith_Kumar_Sp said:

if anything they should realize there's a black market becasue they ain't selling the parts like samsung parts.com

It is known that there is a grey market for generic components, remanufactured components and genuine components from damaged devices. That likely let the black market fly under the radar. They could have claimed them to be pulls from genuine devices.

 

Here is an example of a grey market component:

 

https://www.vice.com/en_us/article/evk4wk/dhs-seizes-iphone-screens-jessa-jones

 

In summary, people seem to have taken apart broken screens from broken phones, replaced almost everything but the ribbon cable and then sold them as high quality remanufactured components. The ribbon cable has an Apple logo on it, so US customs seized it as a counterfeit Apple product, which is how it got publicity. That kind of part is an example of what would be for sale on the grey market.

 

Also, to wrap up the summary, that article is highly critical of Apple for the seizure, but it mentions that the DHS claimed that they had done it on their own initiative, so the criticism of Apple seems unwarranted.

[TechyBen]

IIRC some companies have copied the devices soooo well, they also copy the logo. No doubt though, this is to actually "fake" them.

Sad as people would pay good money for non-branded "pattern" parts for repair, as you get in the car industry (some parts even being upgrades 2x or more better than the factory fitted stuff!).

[ryao]

35 minutes ago, TechyBen said:

IIRC some companies have copied the devices soooo well, they also copy the logo. No doubt though, this is to actually "fake" them.

Sad as people would pay good money for non-branded "pattern" parts for repair, as you get in the car industry (some parts even being upgrades 2x or more better than the factory fitted stuff!).

In the case of the iPhone, the parts that Apple gets from suppliers/contractors are at such a high level of quality that there is not much room for improvement. For example, scientific analysis of the displays on the iPhone showing them to be the highest quality displays on any phone at the time that they were examined.

 

http://www.displaymate.com/iPhone_11Pro_ShootOut_1P.htm

http://www.displaymate.com/iPhoneX_ShootOut_1a.htm

http://www.displaymate.com/iPhone7_ShootOut_1.htm

 

Furthermore, there literally is not any physical room in the iPhone to allow for improvement. Making something better in the same space as the original is not easy.

 

The only ways of improving on the iPhone known to me would be soldering a better/bigger NAND flash chip onto it or replacing the glass with a newer one from Corning. Maybe the battery could be swapped out for one that is designed for a higher cycle life (with the caveat that the phone would be unhappy about the replacement), although lithium ion batteries are really hard to judge as being better. It would be possible to get one that is unsafe from pushing the envelope too far (see the Samsung Galaxy Note 7), so that might be unadvisable.

[Curious Pineapple]

52 minutes ago, RejZoR said:

And people still wonder why Apple is "locking down" batteries and displays so you can't just replace it yourself... And if I'd be in a market for second hand device, I'd also like to know it's genuine and not a cheaply refurbed in someone's garage using crappy cheap parts off eBay/AliExpress and sold to me as pristine iPhone for full price of such pristine used device. But hey, every time talks about this happened I ended up looking like biggest Apple fanboy for defending this. And everyone else was like "but muh repairing of iPhone". Same as people who can barely afford used Mercedes, BMW or Porsche and then use cheapest possible options to stitch it back into somewhat working condition. Don't buy premium brand names if you can't afford their services or parts. It's literally as simple as that. It's the principle and mentality, not fanboys or defending of greedy corporations.

What are you on? A more accurate car analogy would be "oh, your car isn't manufactured any more. Sorry, we can't supply you a new timing belt but you can have a whole new engine, yes that is the price of a new car, no, we can't simply sell you the belt as it can't be replaced." Then what they do is take your old engine, replace the belt and sell it on to the next stupid moron that thinks the sun shines out of "insert manufacturer's" arse.

 

Then they take a small garage to court for "counterfieting" the car as they found out that the belt is exactly the same as a Fiat Punto, just orange instead of black.

 

You are literally defending forcing people to buy a new car because a bearing fails or a tyre needs changing. Imagine the joys of a car manufacturer refusing to cut new keys or designin an immobilizer that can't have new transponders added to it. Loose a key? Well you just have to buy a new car and it will come with 2 new keys for you, look at how good we are to customers. Of course, someone will develop the tools needed to extract the transponder codes and program new transponders, so then Generic Cars Inc. will spend millions having custom IC's manufacturerd just to stop people from reading the codes out and claim it's for "security".

[RejZoR]

3 minutes ago, Curious Pineapple said:

What are you on? A more accurate car analogy would be "oh, your car isn't manufactured any more. Sorry, we can't supply you a new timing belt but you can have a whole new engine, yes that is the price of a new car, no, we can't simply sell you the belt as it can't be replaced." Then what they do is take your old engine, replace the belt and sell it on to the next stupid moron that thinks the sun shines out of "insert manufacturer's" arse.

 

Then they take a small garage to court for "counterfieting" the car as they found out that the belt is exactly the same as a Fiat Punto, just orange instead of black.

 

You are literally defending forcing people to buy a new car because a bearing fails or a tyre needs changing. Imagine the joys of a car manufacturer refusing to cut new keys or designin an immobilizer that can't have new transponders added to it. Loose a key? Well you just have to buy a new car and it will come with 2 new keys for you, look at how good we are to customers. Of course, someone will develop the tools needed to extract the transponder codes and program new transponders, so then Generic Cars Inc. will spend millions having custom IC's manufacturerd just to stop people from reading the codes out and claim it's for "security".

Coz buying new components for 8 years old phone totally makes sense. Not that it's so old it's probably beyond useless but muh repair rights...

[Curious Pineapple]

1 minute ago, RejZoR said:

Coz buying new components for 8 years old phone totally makes sense. Not that it's so old it's probably beyond useless but muh repair rights...

It's every damn product they sell, not just phones. I guess my dual Xeon workstations are beyond useless too?

[ryao]

14 minutes ago, Curious Pineapple said:

What are you on? A more accurate car analogy would be "oh, your car isn't manufactured any more. Sorry, we can't supply you a new timing belt but you can have a whole new engine, yes that is the price of a new car, no, we can't simply sell you the belt as it can't be replaced." Then what they do is take your old engine, replace the belt and sell it on to the next stupid moron that thinks the sun shines out of "insert manufacturer's" arse.

 

Then they take a small garage to court for "counterfieting" the car as they found out that the belt is exactly the same as a Fiat Punto, just orange instead of black.

 

You are literally defending forcing people to buy a new car because a bearing fails or a tyre needs changing. Imagine the joys of a car manufacturer refusing to cut new keys or designin an immobilizer that can't have new transponders added to it. Loose a key? Well you just have to buy a new car and it will come with 2 new keys for you, look at how good we are to customers. Of course, someone will develop the tools needed to extract the transponder codes and program new transponders, so then Generic Cars Inc. will spend millions having custom IC's manufacturerd just to stop people from reading the codes out and claim it's for "security".

In the case of the scam that was reported, people are counterfeiting entire phones with defective parts that were meant to be destroyed. The equivalent would be someone making an entire car out of stolen defective parts.

 

That being said, just changing some parts generally does not cause a car to explode, although changing the battery with a questionable one will cause a phone to explode. Apple claims that it is ensuring that batteries are genuine in the interest of customer safety and there is evidence to support that. If Samsung could not ensure its genuine batteries in the Galaxy Note 7 are safe, a third party that got replacement batteries from wherever probably won’t be in much position to do better. Note that only a small number of Galaxy Note 7 phones actually exploded, so achieving the same safety that Samsung had with its Galaxy Note 7 would likely to be considered to many to be safe, despite not being as safe as the original.

 

Furthermore, I think plenty of us would be unhappy to receive defective equipment unless told in advance what the defects are. While I like right to repair, I can sympathize with Apple on how it is impossible to ensure quality with third party parts. The sources are untraceable as things can change many hands on the way to a repair shop and it only takes one guy to accept something shady to ruin things. Furthermore, stolen phones could have been disassembled for parts, so there is also the ethical issue of the market unwittingly supporting phone thefts.

[ryao]

2 minutes ago, Curious Pineapple said:

It's every damn product they sell, not just phones. I guess my dual Xeon workstations are beyond useless too?

This kind of black market only seems to exist for the iPhone. The most that I have heard happen in terms of Xeons being counterfeit are engineering samples being sold and machines being factory overclocked to allow lesser grade parts to be sold as if they were higher grade ones. In some cases, the binning results in those processors malfunctioning from the overclocking.

[Curious Pineapple]

Just now, ryao said:

In the case of the scam that was reported, people are counterfeiting entire phones with defective parts that were meant to be destroyed. The equivalent would be someone making an entire car out of knock off parts.

 

That being said, just changing some parts generally does not cause a car to explode, although changing the battery with a questionable one will cause a phone to explode. Apple claims that it is ensuring that batteries are genuine in the interest of customer safety and there is evidence to support that. If Samsung could not ensure its genuine batteries in the Galaxy Note 7 are safe, a third party that got replacement batteries from wherever probably won’t be in much position to do better. Note that only a small number of Galaxy Note 7 phones actually exploded, so achieving the same safety that Samsung had with its Galaxy Note 7 would likely to be considered to many to be safe, despite not being as safe as the original.

 

Furthermore, I think plenty of us would be unhappy to receive defective equipment unless told in advance what the defects are. While I like right to repair, I can sympathize with Apple on how it is impossible to ensure quality with third party parts. The sources are untraceable as things can change many hands on the way to a repair shop and it only takes one guy to accept something shady to ruin things. Furthermore, stolen phones could have been disassembled for parts, so there is also the ethical issue of the market unwittingly supporting phone thefts.

If Apple didn't prevent 3rd party manufacturers from supplying quality parts there would be no issue. If BMW prevented Bosch from supplying custom air flow sensors to the public, then the only options would be unreliable knock-offs. If they coded batteries to the car and replacement was a dealer only job, then people will spring up offering to clone or even open up the battery and jamming the control board in something else.