iPhone maker Pegatron halts Shanghai production due to Covid lockdown | China

Leading iPhone maker Pegatron has halted operations at two subsidiaries in the Chinese cities of Shanghai and Kunshan as global supply chains feel the pinch from Beijing’s strict zero-Covid measures.

Shanghai’s business center has become the center of China’s biggest Covid-19 outbreak since the virus surfaced more than two years ago.

The city of 25 million has remained almost entirely in lockdown since the start of the month.

“We have temporarily suspended work,” Pegatron said in a Taiwan Stock Exchange filing on Tuesday.

The Taiwanese firm said it was “actively cooperating with local authorities” and would try to resume operations as soon as possible.

The suspensions apply to two of its subsidiaries, in Shanghai and the neighboring city of Kunshan.

Stay-at-home orders and strict testing rules have strained supply chains in and around Shanghai, home to the world’s busiest container port and a key gateway for foreign trade.

China reported nearly 28,000 local virus cases on Wednesday, the vast majority in Shanghai.

Many factories have been forced to shut down due to rising virus cases, while some employees live at their workplaces as businesses struggle to operate.

The Pegatron suspensions mark the latest blow to Apple, which has seen disruptions to other suppliers’ assembly lines in recent months as Chinese cities struggle to curb virus outbreaks.

In March, another major supplier, Foxconn, halted operations in China’s tech hub of Shenzhen.

Foxconn “resumed core operations” in Shenzhen in late March, the company said.

Chinese authorities have struggled to keep the flow of goods through the country as a difficult virus controls the slow movement.

A Department of Transport circular issued on Tuesday evening banned the “blocking of road transport vehicles” and personnel, ordering more effective screening for Covid-19 along transport routes.

Worried about the spring farming season and food supply, officials in virus-hit areas such as the country’s northeast Jilin Province have also issued passes to allow farm workers to return to farmland by chartered bus.

“China’s economy has faced an increasing risk of recession since mid-March,” Nomura analysts warned this week, citing severe disruptions in export delivery as coastal areas hit hard by controls aimed at contain the virus.


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