iPhone supplier Pegatron suspends production at two factories in China

By Michelle Toh, CNN Business

A major Apple supplier is halting work at its factories in and around Shanghai as the city of 25 million remains under a strict Covid lockdown.

Pegatron said Tuesday it has suspended production at its plant in China’s largest city, as well as the nearby city of Kunshan, until further notice.

“The plant resumption date is to be communicated by the local government,” the company said in a statement, adding that it would work with authorities to resume operations “as soon as possible.”

It was not immediately clear which types of manufacturing would be affected. Pegatron, a Taiwanese company known for making iPhones and other electronics, had previously been allowed to continue operating in Shanghai under a closed-loop system that would keep essential factory workers and other staffers – according to reports from multiple outlets, including Bloomberg.

The company declined to comment further.

He joined a growing list of businesses that have been disrupted by the latest wave of Covid-19 infections in China – and the resulting restrictions.

Shanghai, the financial center of China and home to the regional headquarters of hundreds of people of international companies, has become the epicenter of China’s latest coronavirus outbreak, as well as the latest test of its “zero-Covid” strategy.

Since the start of the last wave in March, the city has recorded more than 220,000 Covid cases, leading to strict stay-at-home orders and bigger headaches for businesses.

The country’s auto industry has been particularly hard hit. This week, Volkswagen said its plants in Shanghai and Changchun, a Chinese manufacturing hub, had suspended production for weeks. Toyota reported a similar issue, saying its Changchun plant had been closed for nearly a month.

Tesla, which has a Gigafactory in Shanghai, has also been forced to suspend production since late March, according to Reuters. The company did not respond to a request for comment from CNN Business.

On Saturday, electric vehicle maker Nio said it had also temporarily halted manufacturing, describing how its suppliers across China had “suspended production one after another” due to pandemic-related disruptions in recent weeks. .

Even before Pegatron’s announcement, Apple was dealing with similar issues in its supply chain. Last month Foxconn, its other major Taiwanese manufacturer, suspended operations in Shenzhen due to a lockdown in the city just north of Hong Kong.

– CNN’s Beijing bureau and Yong Xiong in Seoul contributed to this report.

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