Phone only works on "speaker phone" setting

My wife's Iphone has developed a glitch - it only works on "speaker phone" setting, otherwise you cannot hear the voice from the other connected phone and they cannot hear you. On "speaker phone" mode it works as it should.

This behavior seemed to show up after the phone went through an airport security xray machine, but mine has gone through some & is ok.

I just loaded the new firmware/software update with no affect on the problem. We have both toyed with settings & can't find anything that changes the problem.

My wife has reset her phone (to the point she lost her "favorites", but still no fix.

Any ideas??? Will local apple store replace almost new phone if it is a hardware glitch???