Taiwanese iPhone maker Pegatron suspends operations at two Chinese factories

The logo of Pegatron, which assembles the electronics for Apple Inc iPhones, is seen during an annual general meeting in Taipei, Taiwan June 20, 2017. REUTERS/Tyrone Siu

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TAIPEI, April 12 (Reuters) – Taiwan-based Pegatron Corp (4938.TW), which assembles iPhones for Apple Inc (AAPL.O), said on Tuesday it had suspended operations at its Shanghai and Kunshan factories in China in due to strict government COVID regulations. -19 protocols.

China has placed Shanghai under a strict lockdown since late March and neighboring Kunshan has also tightened restrictions to control the country’s biggest COVID-19 outbreak since the coronavirus was discovered in late 2019 in the city of Wuhan. Read more

Global companies, from phonemakers to chipmakers, rely heavily on China and Southeast Asia for production and have diversified their supply chains after the pandemic took its toll.

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According to Taiwan’s Financial Supervisory Commission, as of April 7, a total of 161 Taiwanese listed companies have reported that their operations in Shanghai and Kunshan have ceased, with 41 of them manufacturing electronics.

“In the best-case scenario, full production resumption may not be possible until late April or early May,” said analyst Ming-Chi Kuo of TF International Securities, adding that Apple could minimize the impact by because of its strong supply chain and relationships. with the Chinese government.

Apple did not immediately respond to a request for comment.

According to data provider TrendForce, personnel, logistics and transportation issues are forcing manufacturers to rely on on-hand inventory, barely meeting production line needs and exacerbating component mismatches.

An increase in shipments and demand for materials after the lifting of lockdowns could also block customs authorities, leading to potential delivery delays, according to the TrendForce report.

iPhone demand could also be hit as consumers divert funds from phones and gadgets to basic necessities.

Pegatron said the resumption of work was dependent on the government authorizing the two factories.

The company said it would maintain close contact with customers and suppliers and “actively cooperate” with local governments to resume work as soon as possible.

The much larger Taiwanese company Foxconn (2317.TW), the world’s largest contract electronics maker, also assembles iPhones in China. Its operations in the southern city of Shenzhen were disrupted last month by an outbreak of COVID-19. Read more

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Reporting by Ben Blanchard in Taipei and Nivedita Balu in Bengaluru; Additional reporting by Emily Chan in Taipei; Editing by Jason Neely, David Holmes and Shounak Dasgupta

Our standards: The Thomson Reuters Trust Principles.

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