Photographs have emerged of broken iPhones being cannibalised for parts, rebuilt and sold as new by a business in South East China.
The factory in Shenzhen in China's Guangdong province is able to refurbish the devices to the extent that they are indistinguishable from brand new iPhones to the naked eye.
The anonymous photographer who took the photos and submitted them to the Central European News (CEN) agency told the Daily Telegraph that the handsets are sold as new models to unsuspecting customers in China.
"The only way to tell is to open up and look inside and who does that when they buy a new phone? They are carefully polished to make them indistinguishable from new devices," the source said.
According to the photographer it is illegal to bring the damaged devices into China openly, meaning the business is forced to smuggle them into the country.
Once reassembled, the sophisticated operation then ships the second hand phones in fake Apple packaging to the buyers.
"They even know how to put codes on the iPhones again to make them indistinguishable from the brand-new models," the source said.
"And it costs a fraction to buy up the parts and build a second hand phone rather than buying a new one, and by selling them as new there was a lot of money to be made."
Apple has previously been accused of passing off refurbished iPhone 4 handsets as new after customers in China discovered that recently purchased devices had reduced warranties when registered online.