The rise of COVID-19 positive cases in other parts of China has shut done Apple suppliers’ China hub leading to supply constraints. According to the South China Morning Post, Kunshan’s 2.1 million residents have also been ordered to stay at home and conduct daily COVID-19 tests until April 12.
Factories in the city have been ordered to stop production since April 2. Since Apple’s major suppliers are based in Kunshan, the halt in production is going to severely impact the global supply chain.
The stop work throws a wrench into the global supply chain of electronics and mechanical products, from printed circuit boards (PCBs), machine parts to the assemblies of original equipment manufacturers (OEMs). Several of Apple’s biggest suppliers are based in Kunshan.
Apple partners, Wistron, Foxconn, and others face challenges in production as Shanghai remains under COVID-19 lockdown
On March 19, it was reported that China imposed a complete lockdown in the cities of Shenzhen and Shanghai after more than over 1,800 coronavirus cases were reported. The local government also shut down production plants of Foxconn, General Interface Solutions (GIS) Holding, Unimicron, and Apple’s other major suppliers in the cities which gave rise to supply constraints concerns. And now the situation has escalated with a lockdown imposed in Kunshan.
The halts are weighing on the fragile global supply chain, which is already under strain from a range of geopolitical issues from the US-China trade war to the Covid-19 pandemic, now entering its third year. In neighbouring Shanghai, a citywide lockdown since late March has idled the chip foundries of Semiconductor Manufacturing International Corporation (SMIC) and Hua Hong Semiconductors.
Although Foxconn was allowed to resume production on a small scale under a closed-loop arrangement in Shenzhen, the COVID-19 outbreak in Kunshan of China is affecting OEM manufacturers and the global supply chain. The report states that;
Kunshan is home to Foxconn, the world’s largest contract manufacturer for electronics including Apple’s iPads and iPhones, and Luxshare Precision, which makes connectors and antennas for Apple’s products.
Both factories in Kunshan are still operating under “closed loops,” which confine staff to their quarters at the plants, with zero contact with outsiders. That slashes the productivity, as workers who live off-site cannot enter the plant, while daily Covid-19 tests disrupt the production cadence, according to people familiar with the matter.