Shanghai/Taipei: Shipments of some Apple products, as well as Dell and Lenovo laptops, are likely to face delays if China’s COVID-19 lockdown continues, analysts said, as curbs force assemblers to shut down. and the closed-loop arrangement becomes difficult to maintain.
China’s race to stop the spread of COVID-19 has jammed highways and ports, stranded workers and countless factories await government approval to reopen – which traverse through global supply chains are being wavered.
Apple Inc. supplier Pegatron Corp said this week it would suspend its plants in Shanghai and Kunshan, where it produces the iPhone 13, iPhone SE series and other legacy models, according to supply chain experts.
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Analysts said Quanta Computer Inc., which produces about three-quarters of Apple’s MacBooks globally, has also shut down operations, which could be hit more severely.
The ultimate impact on Apple’s supply chain is uncertain and depends on factors such as how long the lockdown lasts.
Analysts said the company may consider re-routing production from Shanghai and Kunshan to factories elsewhere, such as Shenzhen, which is not currently under lockdown.
“Apple may consider transferring orders from Pegatron to Foxconn, but we expect volumes to be limited due to logistics issues and the difficulty of equipment adjustments,” said Taipei-based Eddie Han, a senior analyst at Isaiah Research. Foxconn is the trade name of Hon Hai Precision Industry Co., Ltd.
As a worst-case scenario, Pegatron could lag behind at 6 million to 10 million iPhone units if the lockdown last two months and Apple can’t reschedule orders, Han said.
Apple did not respond to a request for comment.
The CEOs of Huawei Technologies Co Ltd and Xpeng Inc have flagged huge economic costs if factories in Shanghai cannot resume production soon.
Shanghai is approaching its third week of lockdown and has shown no sign of a widespread reopening.
Trendforce research manager Forrest Chen told Reuters that if the lockdown is lifted in a few weeks, there is still a chance of recovery.
However, “if the lockdown lasts for more than two months, there is already no way to recover. At that time, after the lockdown is lifted, there will be a shortage for the end users,” he said.
Some suppliers may be able to re-route production.
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Unimicron Technology Corp, which makes printed circuit boards for companies including Apple, told Reuters that the impact of the Kunshan lockdown so far has been modest and it can rely on other plants in Hubei province and Taiwan to support production.
But logistics and transportation remain a nationwide issue, as cities across China take measures.
A factory owner in Kushan told Reuters the district government had announced protocols for reopening but did not give a date for implementation.
Laptop makers could also suffer, including Comple Electronics Inc., a Taiwanese company that makes PCs for Dell Technologies Inc. and Lenovo Group Ltd. from its plants in Kunshan. Chen estimates that about 50% of Comple’s laptop production is located in Kunshan.
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Compel told Reuters on Friday that it has not stopped production at Kushan. Dell and Lenovo did not respond to emails seeking comment.
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