Apple Assembler Pegatron Halts iPhone Production As China Combats COVID Outbreak

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by Tyler Durden
Wednesday, Apr 13, 2022 - 01:05 AM

Supply chains in Shanghai are becoming congested again amid Beijing's zero-COVID policy that has shuttered factories and placed millions of people in lockdown

iPhone assembler Pegatron Corp. is the latest company to suspend production at factories in Shanghai and nearby Kunshan, adhering to local government health requirements to mitigate the worst virus outbreak in two years., according to Bloomberg

Taiwan-based Pegatron announced in a securities filing that the resumption of work at both iPhone plants would require authorization by the government. It said it would "actively cooperate" with local health officials to resume work as fast as possible but gave no timeline. 

Pegatron said it has contacted customers and suppliers and has evaluated the impact of both plants shutting down without elaborating on details. 

What's important about Pegatron is that it's the second-largest assembler of iPhones after Foxconn Technology Group. Pegatron kept production online for weeks after Foxconn was forced to shutter operations last month. Since Shanghai and neighboring Kunshan are now both under tight lockdowns, iPhone assembly in China could be reduced since top producers have shuttered operations.

Bloomberg supply chain analysis shows Foxconn and Pegatron are the two largest producers of iPhones and other Apple products. There are no reports (yet) of supply disruptions of finished electronics. 

On a seasonal basis, US companies generally begin to increase Chinese imports for the summer season. With factories shuttered and logistical networks and ports clogged, this has likely impeded shipments to the US. 

Supply chains are breaking again, which could lead to empty shelves in US stores by summer. Consultancy Trendforce warns Pegatron is down to just a few weeks of stocks.