China still applies a zero-COVID policy and therefore, 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.
Moreover, Apple is not immune. For example, a few weeks ago, factories of Foxconn, one of Apple’s suppliers, were closed for several days, due to government restrictions in Shenzhen.
These few days of closure do not seem to have affected iPhone production too much. However, today, the Cupertino company must also manage factory closures in Shanghai and Kunshan.
According to an article published by Bloomberg, in these two cities, the company Pegatron, which is one of those who assemble the iPhone, would have ceased 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 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, the full resumption of production may not be possible before the end of April or the beginning of May.reads in a series of tweets posted 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
— 郭明錤 (Ming-Chi Kuo) (@mingchikuo) April 11, 2022
Nevertheless, 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 because of this, it can be assumed that in the short term, Foxconn could make up the shortfall, 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 ‘a containment on supply’explains Kuo in another tweet.
Note, however, that the confinements in China do not only affect the production of the iPhone. Indeed, according to Kuo, the Quanta company also had to cease production. However, it would be Apple’s only partner for the production of MacBooks. And because of this, among the main products of Apple are the MacBook who would be most affected.
In his series of tweets, the analyst also explains that the longer the lockdowns last, the more impact there will be on consumer confidence and electronics shipments in the second half of 2022.