Several manufacturers, including Foxconn Technology Group, a major assembler of Apple Inc.’s iPhone, said they were halting operations in Shenzhen in compliance with local government policy.
The government put the city under lockdown for at least a week and said everyone in the city would undergo three rounds of testing after 86 new cases of domestic Covid-19 infection were detected on Sunday.
While China’s case numbers are below global standards, the country has adopted a zero-Covid policy that aims to contain all outbreaks through increased testing and lockdown.
Over the past two years, the world’s second largest economy has repeatedly shut down entire cities or a part of them, ordering factories to suspend operations as people stay home.
Such suspensions typically last for several weeks as officials work to reduce the number of infections, leading to disruptions in production in the semiconductor, automobile and other industries.
Officials did not say when the lockdown in Shenzhen would end, with officials saying they would decide whether the lockdown needed to be extended after a week based on the situation in the pandemic. In recent days, daily COVID-19 infection numbers in China have hit levels not seen since early 2020, and officials have said the increase has been driven by the more contagious but mild Omicron version of the coronavirus.
Over the past two years, companies have been grappling with various supply disruptions stemming from the pandemic, including a major chip shortage. More recently, they have been facing the fallout from Russia’s invasion of Ukraine.
The disruption in Shenzhen came less than a week after Apple showed off new products including the latest version of its budget iPhone SE, which features high-speed fifth-generation, or 5G, communications and high-end Mac studio computers.
Electronics shortages have contributed to a rise in prices around the world, including in the US, where inflation hit a 40-year high of 7.9% in February.
Foxconn’s sites in Shenzhen, southern China, also manufacture some iPhones as well as iPads and computers. However, most iPhones are made in a factory in central Henan province. Foxconn, formally known as Hon Hai Precision Industry Company, said it would aim to maintain production by shifting work to other plants in China.
Printed circuit-board maker Unimicron Technology Corp. said its Shenzhen subsidiary halted production on Monday morning. According to Apple’s latest supplier list, UniMicron is also a major Apple supplier, but does not currently handle orders related to Apple in Shenzhen. UniMicron said subsidiaries account for less than 3% of its total revenue.
At least six other companies on the Apple list are based in Shenzhen.
Apple did not immediately respond to a request for comment.
The city is home to several Chinese manufacturing giants, including telecommunications equipment maker Huawei Technologies Co. and electric-vehicle maker BYD Company, which produces electric cars and batteries.
Some businesses deemed essential remained open in Shenzhen. A company spokesperson said Huawei’s offices in Shenzhen continue to operate in line with local virus control measures. BYD said it faced some impact on production at its manufacturing base in Shenzhen. A spokesperson did not offer details.
All buses and subways have been closed. The local government called on businesses to halt most activities, with the exception of those providing essential services to local people and people in neighboring Hong Kong.
More than 40 Taiwan-based manufacturers of semiconductors and other electronic components filed announcements with the Taiwan Stock Exchange on Monday that they were temporarily closing facilities in Shenzhen and nearby Dongguan.
Another manufacturing hub that has been hit hard by Kovid-19 is Changchun in northeastern Jilin province. There is a lockdown in the city since Friday.
The car plant in Changchun—home of state-owned auto maker China FAW Group Co—has ceased operations in recent days.
Volkswagen AG is halting production at its vehicle and component plants in the city from Monday to Wednesday, a spokesman said, while Toyota Motor Corp halted production at its Changchun plant on Monday and plans to resume operations based on government directives. Planned, a spokesman said.
Toyota and Volkswagen each run their own plants with FAW, their Chinese joint venture partner. Apart from the Toyota and Volkswagen plants, FAW has also halted production at its three other plants, a person with knowledge of the matter said.
On Monday, Jilin authorities tightened epidemic policies, banning most people from leaving the province or the cities they are in.
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