Apple Takes A Supply Chain Hit With China’s Latest Factory Shutting Down

(PresidentialWire.com)- One of Apple’s leading suppliers, Foxconn Technology Group, has halted production at two of its factories in Kunshan, east of China.

This will put even more strain on Apple’s supply chain in China.

Operations have been halted since Wednesday last week when new cases of Covid-19 were reported at two plants where employees are kept in dormitories inside the campuses. Two workers at the factories, who did not want to be named because they were not allowed to speak to the media, say that the two plants have been closed since Wednesday.

Two dormitories have been put on lockdown by local government authorities, who announced on Thursday.

Foxconn plants in Kunshan are in the northern part of the city. They are two of four manufacturing campuses run by a Taiwanese company. Kunshan is home to many factories run by Taiwan-based electronics companies.

Foxconn’s two plants in Kunshan, China, were suddenly shut down last week. The city’s authorities were expected to ease travel restrictions and allow manufacturing to restart in the town.

Earlier this week, the local government gave the go-ahead for 60 companies to start making again. Earlier this month, Kunshan, which has a population of about 2.1 million, began a city-wide lockdown to stop the spread of the Omicron variant and prevent the spread of the virus from Shanghai, which has been having its worst outbreak of Covid-19 so far.

There are about 51 kilometers between Kunshan and the city of Shanghai on its east side. On Friday, Kunshan reported 23 new Covid-19 cases, up from just a few weeks ago. This is a significant change.

Foxconn’s decision to stop working at its two plants in Kunshan is a setback for the Apple supplier, which was able to keep working during the city-wide lockdown because it used a “closed-loop” system that kept employees inside its campuses.

That move also put Apple’s supply chain network in mainland China on edge, as a few other contract manufacturing partners have stopped making products because of Covid-19 restrictions.

An analyst at TF International Securities, Ming-Chi Kuo, said that the company was expected to help make up for the lack of iPhones and iPads in China after two Taiwanese Apple suppliers, Pegatron Corp and Compal Electronics, stopped making them in Kunshan.

Pegatron has stopped making personal computers, communication devices, and other consumer electronics for brands that haven’t been named, a company spokeswoman said on Tuesday.
Late April or early May may be the best time to get production back up and running in Shanghai and Kunshan. Kuo said in a tweet.

Foxconn had to stop working at its factories in Shenzhen earlier this month because China’s tech hub in southern Guangdong province put a city-wide lockdown to fight a surge of Omicron cases. Foxconn restarted some production in the city two days after it stopped working there. It used a closed-loop system to do this.

In 1993, Foxconn opened its first plant in the Yangtze River Delta. Since 1993, Foxconn has made about 290 billion yuan (US$44.6 billion), according to a People’s Daily report in 2020. A lot of people work for Foxconn there.

The same report said that more than 5,300 Taiwanese businesses, including Wistron Corp and Luxshare Precision Industry, had made about 30% of Kunshan’s annual gross domestic product by 2020, which is when the report was made.

The South China Morning Post (SCMP) has been the most trusted source for news about China and Asia for more than a century. This article first appeared in the SCMP.