More than 70 companies own manufacturing plants in Jiangsu Province that directly supply the U.S. tech giant, according to an analysis of Apple's latest available Supplier List. The majority of these are in Kunshan and Suzhou, the two cities near Shanghai. A further 30 or so Apple suppliers have facilities in Shanghai itself, the latest epicenter of the COVID-19 surge in China.
These lockdowns are not only affecting Apple, but other tech giants including Google, Microsoft, Intel, Huawei, Xiaomi, Oppo, and many more.
On Monday, Vice Premier Liu He said the country will work to stabilize industrial development and supply chains, instructing local governments not to block transportation for key logistics. Additionally, local governments in Shanghai and Suzhou have created a 'White List' of key electronics, automotive, and medical suppliers that will gradually be able to resume some manufacturing and logistics activities.
Despite this, suppliers are very concerned.
"We think the impact is much more serious than the power outage last year as it involves a wide range of supply chain," said Chairman Paul Peng of AU Optronics. "The disruption is not to a single company or industry, it's a global supply chain incident that could lead to a supply chain cutoff in the worst-case scenario."
Peng expects it to take "at least another quarter" before normal production resumes. "Some very basic materials such as carton boxes are in serious shortage. Truck drivers who are delivering all the materials and components are in great shortages too," the chairman said.
Apple is said to be aggressively negotiating with Chinese government to reopen supplier production lines that have been shut down due to COVID concerns. Although Foxconn remains operational, other assemblers such as Quanta have been shut down. Even if assemblers are able to operate they need components from suppliers for assembly.
If the situation does not improve by May-June, it could even affect holiday sales of consumer electronics.
"May and June will be crucial for many consumer electronics brand vendors. If production does not ramp up in time for goods to be shipped via ocean cargo, there is a chance they could miss the Christmas holiday sales season in Europe and the U.S. due to congestion at ports -- unless they ship by air, which is much more expensive," an executive with a key HP supplier told Nikkei Asia.
The lockdown is also expected to affect consumer spending in China itself, a key market for Apple.
More details in the full report linked below...