Apple Computer is one of many major electronics firms that outsource work to the factory, which China Labor Watch said was the scene of a riot in September.
China Labor Watch, based in New York, said as many as 4,000 workers had stopped work because of quality demands imposed on iPhone 5 production workers.
China's official Xinhua news agency said 100 quality control inspectors were refusing to work after an altercation with production workers left one injured.
CNN reported Saturday that Foxconn denied the situation had gone beyond the level of a dispute between "a small group of production line workers" and quality control officers.
"Any reports that there has been an employee strike are inaccurate. There has been no workplace stoppage in that facility or any other Foxconn facility and production has continued on schedule," the company said in a statement.
CLW had said in a news release the strike had "paralyzed the production lines" and resulted in several injuries, some requiring hospitalization.
Workers were protesting "overly strict demand on product quality without providing worker training for the corresponding skills," said CLW, which describes itself as an independent not-for-profit group that keeps an eye on factory conditions in China.
CLW said workers were under tremendous pressure to meet quality standards and "could not even turn out iPhones that met the standard."
The strike was also prompted by a refusal to grant workers a vacation during a weeklong Chinese holiday, CLW said.
The watchdog group said quality control inspectors joined the strike after fights broke out between inspectors and production workers. After various physical altercations, management "turned their backs on the issue," CLW said in a statement.
"This strike is a result of the fact that these workers just have too much pressure," said CLW Executive Director Li Qiang.
There were reports in 2010 of a spate of suicides at the factory.
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