iPhone production will not take major hit from China lockdown

Apple Inc’s iPhone production will not take a major hit as a result of Foxconn’s suspension of operations in Shenzen, China, which is facing fresh restrictions to mitigate a COVID outbreak, according to J.P. Morgan experts.

Hon Hai Precision Industry Co Ltd, a key supplier of Apple, said it had suspended operations in Shenzhen until further notice and would use backup facilities to alleviate disruption.

“We believe the impact of the Shenzhen EMS shutdown on iPhone should be limited (10% maximum of global iPhone production), due to poor season and limited production exposure to Shenzhen,” an analyst said Monday.

J.P.Morgan said that Hon Hai’s Shenzhen region accounted for less than 20% of its iPhone production capacity, with the vast majority of assembly facilities located in Zhengzhou, an industrial and transport hub.

Due to the restrictions, many factories in China, including companies run by Toyota and Volkswagen, were temporarily suspended.

Due to these production suspensions, the brokerage does not anticipate a branch-wide restocking, but warns that lockdowns in the Shanghai area might be more causing the disruption.

The lockdown in Shenzhen, China’s Silicon Valley, will not have a significant impact on semiconductor manufacturing, according to the government, and adding that worldwide LCD panel supply may be harmed. List23