The company that assembles iPhone smartphones, Pegatron, has halted production at its Chinese plants in Shanghai and Kunshan due to the worst coronavirus outbreak in two years, disrupting global supply chains.
Resumption of production at the sites will be contingent on notifications from the government. The company is still assessing the impact of the suspension on its finances. The Taiwanese company manufactures iPhones in Shanghai and nearby Kunshan, which are isolated as China pursues its zero-distribution Covid-19 strategy. So far, Pegatron has managed to keep production running because local authorities have allowed some manufacturers to maintain their operations with a closed-loop system that reduces the likelihood of workers becoming infected.
Pegatron is splitting iPhone assembly orders in China with larger Taiwanese competitor Foxconn Technology Group and China’s Luxshare Precision Industry Co. In March, Foxconn suspended some iPhone assembly work in Shenzhen for several days because of Covid-related restrictions.
Shanghai said Monday that it was partially easing the citywide lockdown, but most of its residents were still subject to severe travel restrictions, and local Communist Party chief Li Qiang promised to continue measures to combat the coronavirus. The week-long isolation has caused food shortages and threatens to further complicate already fragile supply chains.
The local Kunshan government said it would stick to its existing Covid prevention policy despite the decline in infections. Widespread quarantines in China are causing unknown damage to the world’s second largest economy, where most electronics from iPhones to laptops to PCs are produced.