Covid-19 closes factories in China, hits Apple supplier and automakers

Covid-19 closes factories in China, hits Apple supplier and automakers

A rise in Covid-19 cases has led China’s manufacturing hubs in Shenzhen and Changchun to shut down in recent days, halting production at many electronics and auto factories in the latest threat to the supply chain. struggling global supply.

A number of manufacturers, including Foxconn Technology Group, a major assembler of iPhones from Apple Inc., said they were shutting down operations in Shenzhen in line with local government policy.

The government has placed the city on lockdown for at least a week and said everyone in the city should undergo three rounds of tests after 86 new cases of domestic Covid-19 infections were detected on Sunday.

While China’s case count is tiny by global standards, the country has adopted a zero-Covid policy that aims to nip all outbreaks in the bud through testing and lockdowns.

Over the past two years, the world’s second-largest economy has repeatedly locked down entire cities or sections of them, ordering factories to suspend operations while people stay at home.

These suspensions usually last for several weeks as authorities work to reduce the number of infections, causing production problems in the semiconductor, automotive and other industries.

Officials did not say when the lockdowns would end – in Shenzhen, officials said they would decide whether the lockdown should be extended after a week depending on the status of the pandemic at that time. In recent days, the daily number of Covid-19 infections in China has reached levels not seen since the start of 2020, and officials said the surge was due to the more infectious but milder Omicron variant of the coronavirus.

Over the past two years, companies have grappled with various supply disruptions resulting from the pandemic, including a major chip shortage. More recently, they have faced the fallout from the Russian invasion of Ukraine.

The disruption in Shenzhen came less than a week after Apple showed off new products, including the latest version of its budget iPhone SE, which features fifth-generation, or 5G, high-speed communications, and the Mac computer. High-end studio.

A shortage of electronics has contributed to higher prices around the world, including in the United States, where inflation in February hit a 40-year high of 7.9%.

Foxconn’s sites in Shenzhen, southern China, produce iPhones as well as iPads and computers. However, the majority of iPhones are made in a factory in the central province of Henan. Foxconn, formerly known as Hon Hai Precision Industry Co., said it would aim to maintain production by moving work to other factories in China.

Printed circuit board manufacturer Unmicron Technology Corp. said its Shenzhen subsidiary halted production on Monday morning. Unimicron is also a major Apple supplier but does not currently handle Apple-related orders in Shenzhen, according to Apple’s Latest Vendor List. Unmicron said the subsidiary accounts for less than 3% of its total revenue.

At least six other companies on Apple’s list are based in Shenzhen.

Apple did not immediately respond to a request for comment.

The city is home to many Chinese manufacturing giants, including telecommunications equipment maker Huawei Technologies Co. and electric vehicle maker BYD. Co.

which produces electric cars and batteries.

Some businesses in Shenzhen deemed essential have remained open. Huawei’s offices in Shenzhen were among those that continued to operate in accordance with local virus control measures, a company spokeswoman said. BYD said it suffered some impact on production at its manufacturing base in Shenzhen. A spokeswoman did not provide details.

All buses and subways have been closed. The local government has called on businesses to suspend most operations, except those providing essential services to residents and residents of neighboring Hong Kong.

As countries ease Covid-19 restrictions, Hong Kong is sticking to a “dynamic zero-Covid” approach – with help from Beijing. A rise in cases has overwhelmed hospitals and is threatening business confidence in the global financial hub. Photo: Bertha Wang/Bloomberg

More than 40 Taiwan-based makers of semiconductors and other electronic components filed announcements with the Taiwan Stock Exchange on Monday saying they were temporarily closing facilities in Shenzhen and nearby Dongguan.

Changchun, in northeastern Jilin province, is another manufacturing hub hard hit by Covid-19. The city has been in lockdown since Friday.

The Changchun auto factories, home to state-owned automaker China FAW Group Co., ceased operations in recent days.

volkswagen HER

is halting production at its vehicle and component plants in the city from Monday to Wednesday, a spokeswoman said, while Toyota Motor Corp.

also halted production at its Changchun plant on Monday and plans to resume operations based on government instructions, a spokesperson said.

Toyota and Volkswagen each run their factories with FAW, their Chinese joint venture partner. In addition to the Toyota and Volkswagen plants, FAW also halted production at its three other plants, a person familiar with the matter said.

On Monday, authorities in Jilin further tightened pandemic policies, barring most people from leaving the province or cities they are in.

Write to Yang Jie at [email protected] and Yoko Kubota at [email protected]

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