Apple MacBook Factory Shuttered By China’s Zero-COVID Policy
China’s zero-COVID policies have forced Apple MacBook maker Quanta Computer Inc. to halt production in the eastern part of the country. The news of this could create new supply chain disruptions that extend far beyond China’s borders this summer.
Bloomberg reports the Taiwan-based company’s Shanghai manufacturing plant suspended operations on Wednesday to comply with government health restrictions.
Quanta makes most of Apple’s MacBook Air and MacBook Pro models, though it has yet to release a timeline on when production lines will restart.
Shanghai is located on the east coast of China and is an economic powerhouse for the country. Soaring COVID infections forced local authorities to enact a lockdown 17 days ago, placing some 25 million residents in quarantine where they can’t leave their homes.
So far, there are limited signs on when Shanghai and the neighboring city of Kunshan will completely lift restrictions. At least 30 other companies suspended output in Kunshan until April 19. One of them is the iPhone assembler Pegatron Corp., which stopped production at factories earlier this week.
China’s zero-tolerance approach to control the COVID outbreak by shutting down everything in the region will have spillover effects on the global economy.
Factory disruptions on the local level and supply chain nightmares at ports will create longer delays and impact U.S. inventories this summer.
Currently, congested transpacific shipping lanes are being alleviated as vessels parking lots increase off the shores of China as port capacity is limited. What’s going to happen is when China reopens, a tsunami of backlog products will head to U.S. West Coast ports, creating congestion once more.
“We have seen this horror show before, and we all know the containers that are currently piling up will eventually make their way to the United States, creating massive congestion,” said FreightWaves.
Semiconductor research firm TrendForce told clients Tuesday that “limited manpower and logistics and suspended transportation options mean [contract electronics makers] can only rely on onsite inventory to barely meet the needs of production lines, further exacerbating component mismatches.” They said suppliers “cannot deliver materials to Shanghai and Kunshan,” which likely means another supply chain crunch is just ahead and will impact the U.S. this summer.
Wed, 04/13/2022 – 15:07