Updated: Mar 15
Chinese electronics manufacturer Foxconn, one of Apple’s leading suppliers, temporarily closed its plants in Shenzhen, including its Longhua flagship facility, over heightened COVID restrictions in the area, reports Nikkei Asia. This development further adds to global supply chain issues that are hurting the market for smartphones and other consumer electronic products. The cost of semiconductor chips and the global uncertainty around the Ukraine conflict has added to such concerns.
The Shenzhen plant closures may have a minimal effect on supply as Foxconn also announced that it would shift production to other plants in China. Also, Reuters reports that sources familiar with the situation have told them that operations would cease at least in the first half of this week. However, Axios notes that these two plants are vital to Foxconn’s manufacturing operations. The site also reports that Shenzhen's port might slow down its operations due to the lockdowns, thus adding to possible worries about the electronic goods supply chain.
Apart from Foxconn, other firms affected by the new restrictions in Shenzhen include Unimicron and Sunflex, both of which are circuit board manufacturers. The operational shutdowns are a result of comprehensive COVID restrictions imposed by the Chinese government, which has adopted a zero-COVID policy in dealing with the virus. According to the New York Times, a similar lockdown last year slowed down the Shenzhen port's operations, leading to a surge in global shipping rates that led to higher prices in several markets, including the U.S.
Foxconn, a Taiwanese electronics manufacturer, is one of China's largest private-sector employers and has worked with Apple since the turn of the century. Apple first asked Foxconn at that time to build some of its iMac computers. It has since played a critical role in Apple's global success by manufacturing the iPhone since it was launched in 2007. Apart from Apple, Foxconn works with companies such as Dell, Intel, Huawei, Lenovo and Acer.
Apple supplier Foxconn has announced that it would shut down two major plants in Shenzhen, China in response to new COVID-19 restrictions imposed by the government.
The shutdown adds to worries surrounding the global supply chain for electronic goods. Other factors include rising semiconductor chip prices and the uncertainty surrounding the Ukraine conflict.
Other affected manufacturers include circuit board makers Unimicron and Sunflex, and the port of Shenzhen is expected to slow down operations with the new restrictions in place.