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China Lockdowns Prompt iPhone Supplier to Look Elsewhere 

Apple supplier to focus on expansion in Vietnam, India, Indonesia and North America, after operations at its factories in China were rocked by Covid lockdowns and labour shortages


iPhone supplier
In recent years, Pegatron has sought to expand its footprint in Asia and North America. Chairman TH Tung said the group's customers had "different reasons" for setting up factories in Vietnam, India and Mexico. File photo: Reuters

 

Taiwan-based Pegatron, an iPhone supplier to Apple, says it will focus on expanding outside China, after its factories on the mainland were hit hard by Covid lockdowns.

The company was forced to suspend work at its plants in Shanghai and Kunshan in April, which hurt its production and delayed deliveries.

The restrictions have now been lifted but Pegatron now plans to “emphasise” its plans to expand to Vietnam, India, Indonesia and North America, a senior executive at the Taiwanese firm said on Wednesday.

In China the company is still facing labour shortages, exacerbated by Covid-19 restrictions, president Liao Syh-jang told an annual shareholders meeting in Taipei.

“We faced Covid controls for two months,” he said.

“We couldn’t have assessed that in advance, so that makes me emphasise our expansions in Vietnam, India, Indonesia and North America, to solve our labour shortage, the gap between peak and low seasons, and to increase the utilisation of our production capacity,” Liao added.

 

ALSO SEE: In Numbers: The Economic Impact of Shanghai Covid Lockdowns

 

‘Different Reasons’

In recent years, Pegatron has sought to expand its footprint in Asia and North America.

Chairman TH Tung said the group’s customers had “different reasons” for setting up factories in Vietnam, India and Mexico.

“But one shared factor is the ability to reduce concentration in Shanghai, Suzhou, Chongqing,” Tung said, adding that recruiting staff in China has become increasingly difficult over the past seven to eight years.

Tung said that with the Covid pandemic easing globally, China coming out of its lockdowns to control the coronavirus and the electronics industry’s peak season coming later in the year, the rest of 2022 should be much better for the company.

“Combining these factors, I expect the second half of the year to be better, or a lot better, than quarter two.”

Foxconn – another Taiwanese firm which is the world’s largest contract electronics maker and also assembles iPhones – predicted last month the the second half of 2022 would see more stable supply chains.

 

• Reuters with additional editing by Jim Pollard

 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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