Apple has admitted reception problems with its iPhones that many consumers are blaming on the gadget's antenna. "Upon investigation, we were stunned to find that the formula we use to calculate how many bars of signal strength to display is totally wrong," Apple said in a statement Friday. "As a reminder, if you are not fully satisfied, you can return your undamaged iPhone to any Apple Retail Store or the online Apple Store within 30 days of purchase for a full refund."

The company said there are problems with the antenna due to a glitch in the software that shows the strength of reception. But many tech experts and iPhone customers do not believe it, saying this cannot explain why voice signals or reception levels deteriorate when users cup the phone in the lower left-hand corner.

Apple CEO Steve Jobs shows the iPhone 4. /AP-Yonhap

Experts say the problems may be due to a design flaw. When he unveiled the iPhone 4, Apple CEO Steve Jobs boasted that the devices was "the thinnest" smartphone in the world measuring just 9.3 mm in width, 0.6 mm thinner than Samsung's Galaxy S smartphone. The iPhone's slim contour can be attributed to its antenna.

Most cell phones made today have their antennas built into the body. Although they only measure between 25 mm to 30 mm in width and 10 mm in height, internal antennas take up space and get in the way of innovative designs. And antennas are usually wrapped with insulators and given ample space inside handsets in order to deal with poor reception problems when blocked by hands. "The ability to build compact yet efficient antennae has a decisive effect on the quality of mobile phones," Samsung Electronics said in a statement.

In the iPhone 4, the antenna is in the metal casing that covers the entire phone, which played a pivotal role in making the iPhone 4 slimmer than its rivals. But Apple's rivals point out that there may be a fundamental flaw in the iPhone 4's antenna design. Kang Myung-koo, head of research at Pantech, said, "It is true that reception quality drops when the user grips the part of the iPhone where the antenna is, but that is not enough to make the signal strength bars decrease."

In most cell phones, the main antenna is in the bottom, because people tend to grip the devices by their sides, so that they are less exposed to the electromagnetic waves. Most countries have safety requirements for electromagnetic waves. Due to their lower levels of electromagnetic waves, wireless LAN or mobile TV antennae are usually placed in the upper portion of mobile phones.

Experts say the controversy over iPhone 4 antenna is just beginning, because they cannot be certain whether the problem is simply due to a software glitch, as Apple claims, or whether there are fundamental problems in the design. iPhone 4 customers in the U.S. are already considering lawsuits. KC&R, a law firm based in Sacramento, California, said it had received around 300 complaints about faulty iPhones as of last week.