A key supplier of Apple products has suspended operations at two of its plants in eastern China amid the country’s strict anti-Covid measures.
Foxconn, a major supplier to Apple, has halted production at its locations in Shenzhen, China after government officials put the city under lockdown because of a spike in Covid-19 cases.
The operations at those plants have been suspended since Wednesday last week, with all employees confined to dormitories inside, the report said.
The two Foxconn plants, located at Dianfa and Fuhong in the northern part of Kunshan, are two of four manufacturing campuses operated in the city by the Taiwanese firm, which is also known as Hon Hai Precision Industry Co Ltd.
China has a zero-COVID-19 policy, which entails the imposition of strict mitigation measures that include isolating individual cases, a sharp contrast to Western countries that have leaned upon mass vaccination and masking.
The operations of Foxconn Interconnect Technology, which makes data transmission equipment and connectors, will remain closed until the authorities give permission to restart, it said.
Foxconn said in a statement:
“As production has previously been deployed to backup factories, the factory’s main products are located in overseas shipping warehouse and inventory levels are still sufficient, the impact on the company’s business is limited.”
More details from the Washington Examiner report:
Millions of people are currently under lockdown orders across China as it fights to isolate those who are infected and to stop community spread of the virus. The number of new cases per day has risen from 100 earlier in the year to more than 20,000.
In March, when the current wave of the virus first began, China announced that Shenzhen, known as the Silicon Valley of China, must put its 17.5 million residents under stringent lockdown orders. Despite the lockdowns, Foxconn was able to continue operations by isolating its workers from the rest of society.
Chinese employees who worked at Foxconn in Shenzhen were moved into company-run dormitories and were driven to and from the factory to avoid contact with nonworkers. The workers also had to undergo COVID-19 testing procedures, basically creating a bubble for them from the outside world.
That strategy of closed-loop management has also been deployed for workers in Dongguan, another major manufacturing hub.
China’s zero-COVID-19 strategy has generated fears that it will bring down the country’s economy and add to global supply chain and inflation concerns.
Retail sales across mainland China fell 2% in March and 3.5% from a year ago, the worst annual plunge since the start of the pandemic about two years ago. The Chinese unemployment rate has also gone up in light of the economic slowdown, rising to 5.8%, the worst since 2020 and above Beijing’s target.
Foreign investors have also begun pulling their money out of Chinese markets. In March, some $7 billion worth of shares were pulled from the Chinese economy by overseas investors.
Additionally, Foxconn’s smaller rival Pegatron Corp. suspended operations at its iPhone plants in Shanghai and Kunshan. Apple laptop maker Quanta Computer Inc. only recently resumed some production after halting work for a few days in Shanghai. In mid-April, Zhengzhou locked down areas near Foxconn’s iPhone City campus, though the move did not affect the plant.