China still applies a zero-COVID policy and as a result, when several cases are detected, the government does not hesitate to confine entire cities to stop the virus. This affects factories, and causes supply problems in the electronics sector.
Furthermore, Apple is not immune. For example, a few weeks ago, factories of Foxconn, one of Apple's suppliers, wereclosedfor several days, due to restrictions imposed by the government in Shenzen.
These few days of closure do not seem to have affected iPhone production too much. However, today, the Cupertino company also has to manage factory closures in Shanghai and Kunshan.
According to an article published by Bloomberg, in these two cities, the Pegatron company, which is one of those that assembles the iPhone, has stopped production. The recovery would still depend on government decisions.
What impact on Apple?
Unfortunately, according to analyst Ming Chi Kuo, these factory closures in Shanghai and Kunshan could last for quite a long time.“COVID-19 lockdowns in China are starting to affect iPhone assembly. Pegatron, the 2nd largest iPhone EMS, has already stopped assembly in Shanghai and Kunshan. In the best case scenario, full resumption of production may not be possible before the end of April or the beginning of May., we read in a series of tweets published by the analyst.
(1/4) 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.https://t.co/KRviniJohq
— Ming-Chi Kuo (@mingchikuo)April 11, 2022
Still, Kuo predicts that the impact on iPhone supply could be limited and short-lived. Indeed, according to the analyst, Foxconn, which is Apple's largest supplier, is not affected by the measures taken by the Chinese government in Shanghai. And from this, it can be assumed that in the short term, Foxconn could make up the deficit, while Pegatron could gradually resume production.
“Although it is difficult to predict future changes on lockdowns, Apple has the best supply chain management capabilities and a good relationship with the Chinese government, so I believe Apple can minimize the impact of 'containment on supply', explains Kuo in another tweet.
Note, however, that the confinements in China do not only affect iPhone production. Indeed, according to Kuo, the Quanta company also had to cease production. However, this would be Apple's only partner for the production of MacBooks. And therefore, among Apple's main products, these are theMacBookwho would be most affected.
In his series of tweets, the analyst also explains that the longer the confinements last, the more there will be an impact on consumer confidence and on shipments of electronic products in the second half of 2022.
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