Foxconn, best known for assembling Apple iPhones, is suspending its operations in Shenzhen after the Chinese government imposed lockdowns in the southern city owing to a rising number of Covid-19 cases.
The world's largest contract electronics maker that counts Apple and Samsung among its customers, Foxconn said the date of factory resumption will be suggested by the Chinese government.
“The operation of Foxconn in Shenzhen, China, has been suspended from March 14 onwards in compliance with the local government's new Covid-19 policy. The date of factory resumption is to be advised by the local government,” Foxconn Technology Group told The National in an email statement.
The Taiwanese company, which has two major campuses in Shenzhen, said it has attuned its production capacities at other manufacturing facilities to balance the impact from the disruption.
“Due to our diversified production sites in China, we have adjusted the production line to minimise the potential impact … meanwhile, we have required all the employees to have Covid PCR test on top of existing prevention measures to ensure the health and safety of our employees,” the company added.
A recent jump in Covid-19 cases has led Chinese manufacturing hubs Shenzhen ― also known as the Silicon Valley of the country ― and Changchun to lock down.
Shenzhen recorded 66 positive cases on Saturday and to curb the spread of the virus, the government levied a week-long lockdown from Monday.
Production has been stopped at various electronics and auto facilities in the region, in what could pose as the latest risk to global supply chains that are still recovering from pandemic-induced disruptions.
Foxconn assembles iPhones, iPads and Macs for Apple in Shenzhen, which is also home to various other technology giants such as Tencent and Huawei.
Taipei-based Foxconn Interconnect Technology, a subsidiary of Foxconn, dropped 9.8 per cent in Hong Kong on Monday. Apple dropped 1.3 per cent to $152.7 a share.
Last week, Apple launched a series of new products including the iPhone SE, the iPad Air, the company’s most powerful chip for personal computers and a new Mac Studio for professional users.
The US venture capital firm Loup Ventures estimated that the new products will account for 5 per cent to 10 per cent of Apple’s revenue over the next year.
Industry analysts said the suspension of the Shenzhen factories will not affect Apple’s supply chains because the company has the scope to increase its production at other plants.
“Apple/Foxconn have the ability to relocate production to other areas in the short term provided that there is not a significantly higher duration of lockdown,” CNBC quoted from a research note written by Bank of America’s analysts on Monday.
“An increased period of shutdowns can cause ripple effects at other components that can create a shortfall in production,” it added.
