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China Covid Curbs Hit Shenzhen-Based Apple Supplier Foxconn

Taiwanese tech giant Foxconn said its Shenzhen operations would be suspended till further notice, while automakers Toyota and Volkswagen have also suspended some operations in Changchun


Foxconn said on Wednesday it will continue Apple with its 'closed loop' work set-up to avoid Covid infections.
Apple's primary iPhone 14 production facility in Zhengzhou has had problems with Covid restrictions and output has been notably affected, the tech giant said this week. Photo: Reuters.

 

China’s efforts to contain its largest Covid-19 outbreak in two years has forced Apple suppliers such as Foxconn and automakers Toyota and Volkswagen to suspend some operations, raising concerns over more supply chain disruptions.

Multiple Chinese provinces and cities have tightened restrictions in line with Beijing’s zero-tolerance goal of suppressing contagion as quickly as possible, among them the southern Chinese tech hub of Shenzhen.

Shenzhen, China’s Silicon Valley, is carrying out mass testing after dozens of new local cases were recorded. Officials have suspended public transport and urged people to work at home this week as much as possible.

China has reported more local symptomatic Covid cases so far this year than it recorded in all of 2021.

 

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Foxconn, formally known as Hon Hai Precision Industry Co Ltd, said its Shenzhen operations would be suspended until further notice, adding it would deploy backup plants to reduce disruption.

Two sources said that Foxconn and its subsidiaries’ operations in Shenzhen would be suspended for the first half of the week.

One of the people said the government was allowing companies to operate if they could create a “closed management” system where employees would live and work in a bubble. Such a system was in place during the Beijing Winter Olympics.

Other Taiwan companies which said they had suspended Shenzhen operations included chip substrate and printed circuit board maker Unimicron Technology Corp, which also supplies Apple and Intel, and flexible printed circuit board maker Sunflex Technology Co Ltd.

Sunflex said its plant would be closed until Sunday. Apple did not immediately respond to requests for comment. Intel declined to comment.

 

Ripple Effect Warning

Paul Weedman, who runs manufacturing consultancy Victure Industrial Co Limited in Shenzhen, warned that the restrictions was having a ripple effect beyond Shenzhen to the wider Guangdong province. Production for some of his customers’ orders have been suspended, and many factory visits cancelled, he said.

“Imagine you have a factory of 100 people and all of a sudden you can’t do anything – you can’t fulfil your existing orders, you can’t accept new orders. The impact is not 2 or 3 weeks, but 3 to 6 months.”

Other cities have enacted restrictions to varying extents. Officials have locked down Changchun city, the capital of northeastern Jilin province, shut schools in the financial hub of Shanghai and suspended public transport in the manufacturing centre of Dongguan.

Toyota said on Monday its joint venture with China’s FAW Group had suspended production in Changchun, while its Tianjin city operations remained unaffected.

Volkswagen, which also has a joint venture with FAW, said it had suspended production at its vehicle and component plants from Monday to Wednesday.

 

  • Reuters with additional editing by Sean O’Meara

 


 

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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