Analysts predict that if China’s Covid-19 lockdowns continue, delivery of some Apple goods, as well as Dell and Lenovo laptops, would be delayed, as assemblers are forced to shut down and closed-loop arrangements become more difficult to maintain.
China’s race to contain Covid-19 has clogged highways and ports, stranded workers, and left countless industries waiting for government authorization to reopen, causing worldwide supply chain delays.
Pegatron Corp, an Apple Inc. supplier, announced this week that it would close its operations in Shanghai and Kunshan, where it produces the iPhone 13, iPhone SE series, and other legacy models, according to supply chain specialists.
Quanta Computer Inc, which manufactures around three-quarters of Apple’s Macbooks worldwide, has also ceased operations, potentially affecting deliveries even more severely, according to analysts.
The long-term impact on Apple’s supply chain is unknown, and it depends on a variety of circumstances, including how long the lockdowns last.
Analysts speculate that the corporation may explore relocating manufacturing from Shanghai and Kunshan to factories in other cities, including as Shenzhen, which is not currently under lockdown.
“Apple may explore switching orders from Pegatron to Foxconn,” said Eddie Han, a senior analyst at Isaiah Research in Taipei. “However, we believe the volume to be restricted owing to the logistics issue and the complexity of equipment adjustment.” Hon Hai Precision Industry Co Ltd is known as Foxconn.
If the lockdowns persist two months and Apple is unable to reroute orders, Pegatron may fall behind on 6 million to 10 million iPhone devices, according to Han.
A request for comment from Apple was not returned.
The CEOs of Huawei Technologies Co Ltd and Xpeng Inc have warned of massive economic repercussions if Shanghai factories do not resume operations soon.
Shanghai is in its third week under lockdown and shows no signs of reopening to the public.
If the lockdowns are lifted in a few weeks, Forrest Chen, research manager at Trendforce, told Reuters, there is still a possibility to recover.
Nonetheless, “There is no way to recover if the lockdown lasts more than two months. There would be a lack of end-users at that point, once the lockout lifts “he stated
It’s possible that some suppliers will be able to reroute output.
Unimicron Technology Corp, which develops printed circuit boards for businesses like Apple, told Reuters that the Kunshan lockdown has had a limited impact on output so far, and that it can rely on neighbouring operations in Hubei province and Taiwan to keep things running.
However, as cities across China take steps, logistics and transportation remain a national concern.
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