China’s measures to stop the spread of Covid-19 are causing more and more disruptions in the production of technological items, affecting global supply chains for products ranging from electric vehicles to iPhones, according to Reuters.
Specifically, the strict confinement imposed on Shanghai and other locations near this city has forced Pegatron, one of Apple’s partners along with Foxconn to manufacture its popular iPhone, to temporarily stop operations in two of its factories, one located in Shanghai and in Kunshan. The measure has been taken even after the country’s authorities eased some of the measures to fight the pandemic in these towns on Tuesday.
Pegatron assured in a statement sent to the Stock Exchange that it will work with the authorities “to resume operations as soon as possible.” But he is not the only Apple partner affected by the measures. As reported by the Japanese newspaper Nikkei, Quanta Computer and Compal, major manufacturers of Apple’s MacBook and iPad, respectively, have also halted their activities.
Dan Ives, an analyst at the investment company Wedbush Securities, expects the closures to have an impact on the production of the different devices of the apple company. As he has assured the BBC, he estimates that the production of three million iPhones have been affected so far this month, and the impact could be greater if the confinement situation persists. Other voices limit the impact that the closure of these Pegatron plants may have on Apple’s business because the demand for the terminals that these factories assemble, the iPhone 13 mini and the SE3, have been slower than other models of the popular mobile.
More gasoline on the fire
However, the Wedbush Securities analyst added that the production of two million iPads and one million McBooks could also be affected by this stoppage in Chinese factories. And he has remarked to the British chain that “Pegatron’s closures throw gasoline on the fire that is already today Apple’s supply chain.”
When he said these words, Ives was surely thinking of Foxconn, the largest manufacturer of the iPhone, which was also forced to stop production of the iPhone. smartphone of Apple in Shenzhen last March after the massive confinement of the city due to an outbreak of coronavirus and the zero covid policy imposed by the Chinese government due to the spread of the omicron variant. Foxconn shifted production to other plants while resuming the one in Shenzhen with employees working in a closed-loop system, which means workers live and work in the factory.
Analysts agree that the lockdown in Shenzhen and other nearby cities increases the risk of a slowdown in the Chinese economy and causes more disruptions in the electronics supply chain. And it is that, as Reuters reported yesterday, more than 30 Taiwanese companies, many of them electronic parts, announced on Wednesday that they were suspending their production.
For example, Asia Electronic Material, which makes parts for laptops, mobile phones and digital cameras, said its plant in Kunshan would be closed until next Tuesday, saying it was “difficult to estimate” the economic impact of the move. Also Efun Technology, which makes parts for liquid crystal displays, and Unimicron Technology, which makes printed circuit boards and supplies Apple and Intel, announced that their plants in nearby Suzhou and Kunshan, respectively, would be closed until Tuesday. .
Impact on world trade
Nomura economists estimate that 45 cities and 373 million people in China are under full or partial lockdown, up from 23 cities and 193 million people a week ago, the FT reported, adding that the move is affecting people. road transport companies causing an impact on world trade.
Although some factories continue to operate under the closed circuit model (keeping their employees isolated inside them), the efforts to acquire materials or to ship products are increasing. Electric car maker Nio said last weekend it was halting deliveries after its suppliers in Shanghai and elsewhere had halted production.
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