China’s race to stop the spread of COVID-19 has clogged highways and ports, stranded workers and left countless factories awaiting government approval to reopen
China’s race to stop the spread of COVID-19 has clogged highways and ports, stranded workers and left countless factories awaiting government approval to reopen
Deliveries of some Apple products, as well as Dell and Lenovo laptops, are likely to face delays if China’s COVID-19 lockdowns last, analysts said, as restrictions force fitters to close and closed loops are harder to maintain.
China’s race to halt the spread of COVID-19 has clogged highways and ports, stranded workers and left countless factories awaiting government approval to reopen – disruptions cutting through global supply chains.
Apple Inc.’s supplier Pegatron Corp. said this week it would close its plants in Shanghai and Kunshan, where it makes the iPhone 13, iPhone SE series and other legacy models, according to supply chain experts.
Quanta Computer Inc., which makes about three-quarters of Apple’s MacBooks worldwide, has also halted operations, which could have a greater impact on shipments, analysts said.
The ultimate impact on Apple’s supply chain is uncertain and will depend, among other things, on how long the lockdowns last.
The company may also consider redirecting production from Shanghai and Kunshan to other factories like Shenzhen, which is not currently under lockdown, analysts said.
“Apple may consider transferring orders from Pegatron to Foxconn, but we understand the volume may be limited due to the logistics issue and difficulty in customizing equipment,” said Taipei-based Eddie Han, senior analyst at Isaiah Research . Foxconn is the trading name of Hon Hai Precision Industry Co. Ltd.
In a worst-case scenario, if the lockdown lasts two months and Apple can’t redirect orders, Pegatron could fall behind with 6 million to 10 million iPhone units, Mr Han said.
Apple did not respond to a request for comment. The CEOs of Huawei Technologies Co Ltd. and Xpeng Inc. have pointed to huge economic costs if Shanghai factories cannot resume production soon.
Shanghai is approaching its third week of lockdown and has shown no signs of a broad reopening.
Forrest Chen, research manager at Trendforce, told Reuters there’s still a chance of recovery when lockdowns are lifted in a few weeks.
“However, if the lockdown lasts more than two months, there is already no way to recover. At that point, after the lockdown was lifted, there would be a shortage of end users,” he said.
Some suppliers may be able to redirect production.
Unimicron Technology Corp., which makes circuit boards for companies like Apple, told Reuters that the impact of Kunshan’s lockdown has been minor so far and that it can rely on other plants in Hubei province and Taiwan to support production.
However, logistics and transportation remain a nationwide concern as cities across China take action.
A factory owner in Kunshan told Reuters that the county government has announced a protocol for reopening but has not given a date for implementation.
Laptop makers could also suffer, including Compal Electronics Inc., a Taiwan-based company that makes PCs for Dell Technologies Inc. and Lenovo Group Ltd. at its Kunshan plants. manufactures. Chen estimates that about 50% of Compal’s laptop production is based in Kunshan.
Compal told Reuters on Friday that production in Kunshan has not been shut down. Dell and Lenovo did not respond to emails requesting comment.
