Shipments of some Apple products, as well as Dell and Lenovo laptops are likely to face delays if China’s COVID-19 lockdowns persist, analysts said, as curbs force assemblers to shut down and closed-loop arrangements get harder to maintain.
China’s race to stop the spread of Covid-19 has jammed highways and ports, stranded workers and left countless factories awaiting government approval to reopen – disruptions that are rippling through global supply chains.
Apple Inc supplier Pegatron Corp said this week it would suspend its plants in Shanghai and Kunshan, where according to supply chain experts it produces the iPhone 13, the iPhone SE series, and other legacy models.
Quanta Computer Inc, which produces some three-quarters of Apple’s Macbooks globally, also shut operations, which could impact delivers more severely, analysts said. The final impact on Apple’s supply chain is uncertain and depends on factors including how long lockdowns persist. The company may also consider re-routing production out of Shanghai and Kunshan to factories elsewhere, such as Shenzhen, which currently is not under lockdown, analysts said.
“Apple may consider transferring the orders from Pegatron to Foxconn, but we expect the volume may be limited due to the logistics issue and the difficulty of equipment adjustment,” 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 may fall behind on 6 million to 10 million iPhone units if the lockdowns last two months and Apple cannot reroute orders, Han said. Apple did not respond to a request for comment.
The chief executives 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 wide re-opening.
Forrest Chen, research manager at Trendforce said that if lockdowns lift in a few weeks, there is still a chance to recover.
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