Apple's relationship with Foxconn is eroding, according to new report

Foxconn Source: Bloomberg

What you need to know

Apple's relationship with Foxconn is changing.
The company is looking to diversify its supply chain.
The moves are causing Foxconn to employ questionable business practices.

A new report from The Information (via MacRumors), details a potentially eroding relationship between Apple and its longtime partner Foxconn. According to the report, Foxconn's single-digit profit margins are causing the company to "employ questionable tactics" in order to grow its earnings.

Foxconn has apparently been dishonest with Apple about the number of employees it has hired as well as used Apple's own equipment to make devices for its rivals.

For manufacturing projects, Foxconn routinely tells Apple that it hired more workers than it actually did. Foxconn has also used Apple-owned equipment when making devices for Apple's rivals, and has taken shortcuts on component and product testing. As a result, Apple has increased monitoring and tracking of Foxconn employees and its equipment that's in Foxconn facilities.

Former Apple and Foxconn employees tell a story about Apple beginning to change its relationship with Foxconn as it looks to diversify its supply chain.

More than two dozen former Foxconn and Apple employees told The Information that the relationship between the companies is changing as Apple seeks to diversify its supply chain. Apple originally spoke to Foxconn about manufacturing the AirPods Pro, for example, with Foxconn expecting to win the contract and retrofitting a facility for production purposes only to see the contract go to Foxconn's competitors.

The report goes on to talk about Foxconn's decision to cut corners back when the iPhone 7 was released, even going as far as to hide such information from Apple.

Foxconn has disregarded some of Apple's policies, using Apple equipment for non-Apple products as mentioned above and providing Google employees with a tour of a Foxconn factory manufacturing the 12-inch MacBook ahead of its release. Foxconn also reportedly cuts corners with manufacturing. With the iPhone 7, some reject phones had loose screws or tiny bits of metal that were supposed to be disassembled, but Foxconn instead opened the flawed phones, removed debris, and resealed them to avoid wasting materials, a process hidden from Apple.

You can read the full report on Apple and Foxconn on The Information's website.