Due to the government’s tight COVID-19 rules, Taiwan’s Pegatron Corp (4938.TW), which assembles iPhones for Apple Inc (AAPL.O), said on Tuesday that operations at its Shanghai and Kunshan plants in China had been suspended.
Since the coronavirus was found in late 2019 in the city of Wuhan, China has put Shanghai under a tight lockdown since late March, and neighboring Kunshan has also increased restrictions to control the country’s largest COVID-19 outbreak.
Global firms, from phone producers to chip makers, are heavily reliant on China and Southeast Asia for production and have been diversifying their supply chains in the aftermath of the pandemic.
According to Taiwan’s Financial Supervisory Commission, 161 listed Taiwanese companies stated their operations in Shanghai and Kunshan had ceased as of April 7, with 41 of them producing electronics.
“In the best-case scenario, complete resumption of production may not be possible until late April or early May,” TF International Securities analyst Ming-Chi Kuo said, adding that Apple’s robust supply chain and relationship with the Chinese government might mitigate the damage.
A request for comment from Apple was not immediately returned.
According to data source TrendForce, staffing, logistical, and transportation challenges are pushing businesses to rely on available inventory, which is barely fulfilling the needs of production lines and worsening component mismatches.
According to TrendForce research, a rise in shipments and demand for products when the lockdowns are removed could clog customs authorities, causing delivery delays.
Consumers may move spending from phones and gadgets to everyday necessities, reducing demand for iPhones. The commencement of operations, according to Pegatron, is contingent on the government’s approval of the two plants.
Customers and suppliers will be kept informed, and the company would “actively cooperate” with local governments to get back to work as quickly as possible, according to the corporation.
Apple is also assembled in China by the far larger Taiwanese firm Foxconn (2317.TW), the world’s largest contract electronics manufacturer. A COVID-19 outbreak in the southern metropolis of Shenzhen hampered its operations last month.
Pegatron Corporation is a Taiwanese electronics manufacturer that specializes in developing computing, telecommunication, and consumer devices for branded companies. It also creates, designs, and produces computer components and peripherals. Notebooks, netbooks, desktop computers, gaming consoles, handheld devices, motherboards, video cards, and LCD TVs are among Pegatron’s main products, as well broadband communication products such as cellphones, set-top boxes, and cable modems.
