Apple, Toyota, and Volkswagen supplier Foxconn suspends production in China due to COVID outbreak

Apple’s major gadget assembler and supplier, Foxconn, has suspended its operations in Shenzhen, China, as the cases of COVID-19 in the area have dramatically soared. The entire city is also in lockdown thus, work in the factory was interrupted.

The temporary closure of Foxconn’s manufacturing facility was reported on Monday, March 14. With the news of factory shut down, CNBC reported that Apple’s stock also dived by over 1.5% in pre-market trading.

The unexpected shutdown comes not long after the iPhone maker unveiled its newest products including a cheaper mobile phone. The Taiwanese tech company is Apple’s major supplier that makes some iPhones, Macs, and iPads in its Shenzhen plant.

With the situation, it was mentioned that Apple may increase the order of production in Henan province to compensate for some of the losses resulting from the closure of Foxconn’s plant. It is not yet certain when the company is re-opening the factory, but in the past, closures related to COVID have lasted several weeks.

“Apple/Foxconn has the ability to relocate production to other areas in the short term provided that there is not a significantly higher duration of lockdown,” the company’s analysts said as per CNBC. “An increased period of shutdowns can cause ripple effects at other components that can create a shortfall in production.”

At any rate, aside from Apple and Foxconn, car manufacturing giants - Volkswagen and Toyota are also affected by the COVID outbreak in the country. The two automakers have also halted their operations in Changchun, China, Reuters reported.

Many Chinese provinces and cities have implemented tighter rules to help contain the new outbreak. The efforts being carried out by companies to curb COVID are also in accordance with Beijing’s zero-tolerance goal of stopping the spread of the contagious disease as fast as possible. However, the downside is that the tightened policies have disrupted businesses and the supply chain.

Finally, it was mentioned that mass testing for COVID is ongoing in Shenzhen after the region recorded dozens of new cases. As preventive measures, the government has also ordered the suspension of public transport, and people were asked to work at home for this week.