Shipments of some Apple products, as well as Dell and Lenovo laptops are likely to face delays if China's COVID-19 lockdowns persist, analysts said, as curbs force assemblers to shut down and closed-loop arrangements get harder to maintain.
China's
race to stop the spread of COVID-19 has jammed highways and ports, stranded
workers and left countless factories awaiting government approval to reopen -
disruptions that are rippling through global supply chains.
Apple
supplier Pegatron said this week it would suspend its plants in Shanghai and
Kunshan, where according to supply chain experts it produces the iPhone 13, the
iPhone SE series, and other legacy models.
Quanta Computer Inc, which produces some three-quarters of
Apple's MacBooks globally, also shut operations, which could impact delivers
more severely, analysts said.
The final impact on Apple's supply chain is uncertain and
depends on factors including how long lockdowns persist.
The company may also consider re-routing production out of
Shanghai and Kunshan to factories elsewhere, such as Shenzhen, which currently
is not under lockdown, analysts said.
"Apple may consider transferring the orders from
Pegatron to Foxconn, but we expect the volume may be limited due to the
logistics issue and the difficulty of equipment adjustment," said
Taipei-based Eddie Han, a senior analyst at Isaiah Research. Foxconn is the
trade name of Hon Hai Precision Industry Co Ltd .
As a worst-case scenario, Pegatron may fall behind on 6
million to 10 million iPhone units if the lockdowns last two months and Apple
cannot reroute orders, Han said.
Apple did not respond to a request for comment.
The chief executives of Huawei Technologies and Xpeng have
flagged huge economic costs if factories in Shanghai cannot resume production
soon.
Shanghai is approaching its third week of lockdown and has
shown no sign of a wide re-opening.
Forrest Chen, research manager at Trendforce told Reuters
that if lockdowns lift in a few weeks, there is still a chance to recover.
However, "if the lockdown lasts longer than two months,
there is already no way to recover. At that point, after lockdown lifts, there
would be a shortage for end-users," he said.
Some suppliers may be able to re-route production.
Unimicron Technology Corp, which makes printed circuit
boards for companies including Apple, told Reuters the impact of the Kunshan
lockdown so far has been minor and that it can rely on other plants in the
Hubei province and Taiwan to support production.
But logistics and transport remain a nationwide issue, as
cities across China enact measures.
One factory owner in Kunshan told Reuters that the district
government had announced protocol for re-opening but provided no date for
implementation.
Laptop makers may also suffer, including Compal Electronics
Inc, a Taiwan-based company that makes PCs for Dell Technologies and Lenovo
Group from its plants in Kunshan. Chen estimates that roughly 50 percent of
Compal's laptop production is located in Kunshan.
Compal told Reuters on Friday that it had not halted
production in Kunshan. Dell and Lenovo did not respond to emails seeking
comment. © Reuters
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