HIGHLIGHTS
- Pegatron is a Taiwanese firm that manufactures iPhone models for Apple.
- Pegatron has halted operations at its factories in Shanghai and Kunshan.
- A total of 161 listed Taiwanese enterprises have ceased operations in various fields.
Pegatron Corporation, which assembles iPhones for Apple, announced on Tuesday that operations at its Shanghai and Kunshan factories in China had been halted owing to the government's rigorous COVID-19 rules.
Since late March, China has placed Shanghai under lockdown, and neighboring Kunshan has also tightened controls to manage the country's largest COVID-19 epidemic since the coronavirus was found in late 2019 in the city of Wuhan.
Global corporations, from from phone manufacturers to chip makers, are heavily reliant on China and Southeast Asia for manufacturing and have been diversifying their supply chains since the epidemic wreaked havoc.
According to Taiwan's Financial Supervisory Commission, as of April 7, 161 listed Taiwanese businesses stated that their activities in Shanghai and Kunshan had ceased, with 41 of them producing electronics.
"In the best-case scenario," TF International Securities analyst Ming-Chi Kuo said, "full restart of production may not be achievable until late April or early May," adding that Apple may mitigate the damage owing to its robust supply chain and connection with the Chinese government. Apple did not reply quickly to a request for comment.
According to data source TrendForce, staffing, logistical, and transportation challenges are pushing businesses to rely on available inventories, barely fulfilling the demands of production lines and worsening component mismatches.
According to the TrendForce analysis, a rise in shipments and demand for commodities when lockdowns are released might potentially clog customs officials, causing possible delivery delays.
Consumers' spending on phones and gadgets may be diverted away from phones and gadgets and toward everyday necessities, reducing demand for iPhone devices.
Pegatron stated that the commencement of operations was contingent on the two factories receiving government approval.
The firm stated that it will retain constant communication with consumers and suppliers, as well as "actively engage" with local governments, in order to restart operations as soon as feasible.
Foxconn, the world's largest contract electronics manufacturer, also assembles iPhones in China. Its activities in Shenzhen, China's southernmost city, were halted last month due to a COVID-19 outbreak.
