China Business has reported citing an unknown Foxconn staffer that Cupertino has returned a lot of iPhones “due to appearance of substandard or dysfunctional problems.” If the figures are correct, The Register estimates that Foxconn would have to take a hit of somewhere around $1.6 billion. This figure is extreme considering $200 a pop and that none of the parts of the iPhones would be usable, which is highly unlikely.

If the reports are true, it’s not only folks at Foxconn who will have to worry as Apple would also face severe iPhone shortages. There is no information on which handsets have been returned but, if the models are the one that are currently selling well – the iPhone 4S and the iPhone 5, Cupertino would definitely be facing some supply deficit of about 2-3 weeks.

It may also turn out that the returned units are of the not-yet-released iPhone model and if this is the case we may not see the next iPhone launching anytime soon.