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As China cracks down on a sharp rise in Covid-19 cases, major suppliers in Shenzhen are pausing manufacturing.
New lockdowns to curb the spread of Covid-19 in China are expected to disrupt tech supply chains as electronics manufacturers such as Foxconn, which supplies Apple and Samsung, are halting operations in some plants.
The lockdowns are a response to rising case numbers in China, in what is being described as the worst Covid-19 outbreak since the pandemic started. Cities such as Shenzhen, Shanghai and Changchun are in partial or total lockdown.
Shenzhen, a global tech hub and often regarded as China’s Silicon Valley, went into lockdown yesterday (13 March) for at least a week, affecting the manufacturing operations of Foxconn, which makes iPhones that are shipped around the world.
Sources familiar with the matter told Reuters that Foxconn operations in Shenzhen will pause for at least the next few days and that it would deploy back-up manufacturing plants to soften the blow of any potential supply chain disruption.
This news comes just days after Apple made some key product announcements, including the launch of a new budget iPhone with 5G.
One source told Reuters that the Chinese government was allowing companies to continue operations as normal if they established a “closed management” system where employees are cut off from the rest of the population and work in a bubble. However, it is not clear if Foxconn or any of the other suppliers affected plan to introduce such measures.
This isn’t good news for the global tech supply chain, which has already been disrupted by an ongoing chip crunch that ate into the earnings of major tech companies last year including Apple and Amazon.
Unimicron Technology, which manufacturers chip parts and supplies to Intel, is also halting its operations in Shenzhen, according to Reuters. The city is also home to a number of global tech companies including Huawei, Tencent and Oppo.
While much of Europe and other parts of the world have eased pandemic restrictions, China continues to take a strict stance on Covid-19 and use mass lockdowns as an option to curb the spread of the virus.
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