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When Apple introduced the iPhone 5 last fall, it made sure to mention its complex manufacturing process. “Never before have we built a product with this extraordinary level of fit and finish,” Jony Ive said during a video on the handset.

The extra effort has obviously paid off, as the iPhone 5 has been very popular with consumers. But it’s also causing problems for Foxconn, Apple’s manufacturing partner, who continues to struggle with the device’s intricate production methods…

The Register (via 9to5Mac) points to a new report from China Business:

“Foxconn has apparently botched a batch of iPhones, which Apple returned to the contract manufacturer because they were not fit for sale.

Details of just what went wrong are sketchy, as the source for this tale is an anonymous Foxconn staffer chatting to China Business. That report, after being forced through a couple of translation engines, suggests Apple sent back at least five million iPhones, and maybe as many as eight million, “due to appearance of substandard or dysfunctional problems.”

If true, this is bad news for both companies. With manufacturing costs around $200 per handset, Foxconn would have to eat in upwards of $1 billion to cover the bad batch. And it would leave Apple with shorter-than-expected iPhone supply.

Foxconn’s been having problems with iPhone 5 production from the get-go. There’s been several reports of quality control issues since the handset launched last fall, with many consumers complaining of scratches—particularly on black models.

In fact, the device’s complicated manufacturing process sparked a riot in one of Foxconn’s plants last fall, as workers clashed with management, claiming Apple set the quality bar too high. Foxconn was forced to temporarily shut down the factory.

It’ll be interesting to see what effects, if any, this has on Apple moving forward. Could the ongoing production issues cause the company to rethink the design of its next-gen handset? Interestingly enough, the iPhone 5S is expected to be delayed.