March 14, 2022
Sarah Wu and Narihika Siruza
TAIPEI / BEIJING (Reuters) (Reuters) – China’s efforts to end COVID-19’s biggest outbreak in two years have forced Apple vendors such as Foxconn for automakers Toyota and Volkswagen to suspend some operations, raising concerns about supply chain disruptions.
Several Chinese provinces and cities have tightened restrictions in line with Beijing’s zero-tolerance goal of suppressing the infection as soon as possible, including South China’s Shenzhen Technology Center.
Shenzhen, China’s Silicon Valley, is conducting mass testing after dozens of new local cases were registered. Officials suspended public transport and urged people to work as much as possible at home this week.
This year, China reported more local symptomatic cases of COVID-19 than for the whole of 2021.
Foxconn, officially known as Hon Hai Precision Industry Co Ltd, said its operations in Shenzhen would be suspended until further notice, adding that it would deploy backup installations to reduce disruptions.
Two sources familiar with the matter told Reuters that Foxconn and its subsidiaries in Shenzhen would be suspended for the first half of the week.
One person said the government would allow companies to operate if they could create a “closed management” system in which employees would live and work in a bubble. Such a system operated during the Beijing Winter Olympics.
Other Taiwanese companies that said they had suspended operations in Shenzhen included Unimicron Technology Corp., a manufacturer of chip substrates and printed circuit boards that also supplies Apple and Intel, and Sunflex Technology Co. Ltd., a manufacturer of flexible PCBs.
Sunflex said its plant would be closed until Sunday.
Apple did not immediately respond to requests for comment. Intel declined to comment.
Paul Widman, who runs the manufacturing consulting firm Victure Industrial Co., Limited in Shenzhen, warned that the restrictions are outside Shenzhen on Guangdong Province. He said production on some of his customers ’orders had been suspended and many visits to the plant had been canceled.
“Imagine you have a factory for 100 people and all of a sudden you can’t do anything – you can’t fulfill existing orders, you can’t take new ones. The effect is not 2-3 weeks, but 3-6 months.
The Yangtian International Container Terminal (YICT) in Shenzhen, one of China’s busiest ports, said in a statement to WeChat that it was operating normally, although two companies with warehouses in the port said they needed to suspend operations.
Other cities have imposed restrictions to varying degrees. Officials closed Changchun, the capital of northeastern Jilin Province, closed schools in Shanghai’s financial center and suspended public transportation at Dongguan’s production center.
Toyota said Monday that its joint venture with China’s FAW Group has suspended production in Changchun, while operations in Tianjin have not been affected.
Volkswagen, which also has a joint venture with FAW, said it had suspended production at its car and component plants Monday through Wednesday. FAW, headquartered in Changchun, did not respond to a request for comment.
The owner of the factory in Dongguan, who gave his last name Lau, said his factory was forced to shut down from Sunday to Tuesday. They also had problems receiving materials from suppliers due to viral restrictions, he added.
“I hope they will allow us to continue production soon,” he said. “There is little we can do. The whole world has gone on, except China. They should just abandon the COVID-19 strategy. “
(Report by Sarah Wu, Ben Blanchard and Imou Lee in Taipei, Narihika Siruza in Beijing; additional reports by Josh Horwitz in Shanghai and Stella Qiu in Beijing; Author Brandi Go; Editor Christopher Cushing, Muralikumar Anantaraman and Jane Macafi)