Surging Covid-19 infections and strict government response, forces Taiwan’s Pegatron to halt iPhone production at two Chinese factories
Taiwan’s Pegatron Corp which assembles iPhones handsets for Apple, said on Tuesday it had suspended operations at its Shanghai and Kunshan plants in China.
Reuters reported that the decision to suspend production at the two factories is due to the Chinese government’s strict Covid-19 protocols.
Pegatron is a key supplier to Apple, but that did not stop the firm in late 2020 placing the Taiwanese firm on probation after it allegedly violated Apple’s supply chain rules, when it asked students to work night shifts and overtime at one of its plants in mainland China.
But the closure of two factories comes as China currently is battling the biggest Coronavirus outbreak since the virus first emerged in Wuhan in late 2019.
As a result, the Chinese government put Shanghai under a tight lockdown since late March. Neighbouring Kunshan has also implemented restrictions.
Tesla has also been caught up in this and it was recently forced to temporarily suspend production for several days at its Shanghai factory.
Shuttering factories in China in the past couple of years has highlighted the dependence of many companies and countries on the production and manufacturing facilities located in the far east.
Companies as a result have begun diversifying their supply chains after pandemic shutdowns caused manufacturing and supply chain chaos around the world.
Earlier this week for example, Apple began manufacturing its flagship iPhone 13 in India, as it seeks to reduce its reliance on its Chinese supply chain.
Reuters quoted Taiwan’s Financial Supervisory Commission, as saying that as of 7 April 7 a total of 161 listed Taiwanese companies reported their operations in Shanghai and Kunshan have stopped, 41 of them make electronics.
“In the best-case scenario, complete resumption of production may not be possible until late April or early May,” analyst Ming-Chi Kuo with TF International Securities was quoted as saying, adding that Apple could minimise the impact due to its strong supply chain and relationship with the Chinese government.
Apple did not immediately respond to a request for comment.
Pegatron said the resumption of work depended on the two plants being given clearance by the government.
The company told Reuters it will maintain close contact with customers and suppliers and “actively cooperate” with local governments to resume work as soon as possible.
Meanwhile Foxconn’s operations in the southern city of Shenzhen were reportedly disrupted last month by a Covid-19 outbreak there.