Foxconn, a major Apple supplier, has announced the suspension of its production in Shenzhen after the decision of the Chinese authorities to confine the city, affected by a resurgence of Covid-19 contamination.
Foxconn stops producing in Shenzhen, a blow for Apple? | Photo credit: Apple
The Taiwanese Foxconn, main assembler of several Apple products, announced the closure of its two factories located in Shenzhen, often nicknamed the “Chinese Silicon Valley”, after Beijing’s decision to impose total containment on the 17.5 million of city residents. The Chinese authorities have also called on “non-essential” local businesses to suspend their activity until March 20.
A shortfall in terms of production
Foxconn’s Chinese headquarters, also referred to as Hon Hai Precision Industry, is in the region where it has another factory in Guanlan. The two sites are a major production center for Apple products, including the latest iPhone 13, according to workers cited by the FinancialTimes. Foxconn announced the total cessation of its production on these two sites without specifying the duration of the suspension. The group will also adjust its production on other sites in order to limit the impact of the interruption.
While the lockdown is likely to affect the production of many products Foxconn makes for Apple and other brands, demand for electronic equipment is generally weak in the first three months of the year, which comes just after the period’s peak. festivals.
Zhengzhou site not affected
The interruption should therefore not affect Apple’s supply chain of iPhones. Located in Zhengzhou, Foxconn’s main production site has not been affected by the recent resumption of the epidemic, which should help to compensate for the loss of production capacity. The seasonal reduction in demand should also compensate for the shortfall in terms of production. According to IDC data, Foxconn assembled 70% of global iPhone production in the fourth quarter.
In Taiwan, Foxconn shares ended on a limited decline of 0.5% on Monday, while in Hong Kong, the Hang Seng fell nearly 5%. In New York, futures contracts on the Nasdaq 100 index rose 0.8%, while Apple shares gained a few points ahead of the New York Stock Exchange.
J.W.