What you need to know
- COVID-19 lockdowns are starting to take hold in China.
- The measures are forcing iPhone suppliers to suspend production in the country.
- Three major suppliers have suspended operations near Shanghai and Kunshan.
Multiple new reports indicate that major Apple suppliers have been forced to suspend operations because of COVID-19 lockdowns in China.
On Monday analyst and supply chain insider Ming-Chi Kuo took to Twitter stating:
China's COVID-19 lockdown is starting to affect iPhone assembly. Pegatron, the 2nd largest iPhone EMS, has already halted assembly in Shanghai & Kunshan. In the best-case scenario, complete resumption of production may not be possible until late April or early May.
Kuo said that Apple's biggest supplier Foxconn remains unaffected and can fill the gap, but that this would still make for a brief interruption to iPhone supply. He further stated that the longer the lockdowns went on, the more detrimental it would be to supply and consumer confidence.
That report has been reiterated Tuesday by Nikkei Asia, which reports that three key Apple suppliers have suspended production near Shanghai as a result of the strict measures:
Three key Apple suppliers have suspended production in and near Shanghai as strict COVID-19 lockdown measures show signs of affecting the U.S. tech giant's supply chain in China.
Pegatron says that two sites in Shanghai and Kunshan have suspended production to comply with government regulations. As the report notes Pegatron makes 20-30% of all of Apple's best iPhones including the iPhone 13, and these are its only two iPhone plants.
Another supplier, Quanta, which makes MacBooks for Apple, says it has halted production since the start of April in Shanghai for the same reason. Finally, Compal Electronics, a "major iPad and notebook maker" has suspended activities at its Kunshan facilities.
One iPhone maker in the region, Luxshare Precision Industry, says its sole plant in Kunshan continues to operate under closed-loop management. This means, as per reports from the earliest months of the pandemic in 2020, that all staff are confined to living and working on-site to prevent disruption caused by the spread of the virus.
The news will be unwelcome to Apple and its shareholders, as well as customers hoping to get their hands on the latest devices, because of this latest disruption.
The only reprieve for Apple is that production of its iPhone SE remains less important because demand for the device is reportedly much lower than expected.