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Apple Urges Chinese Suppliers to Speed Up iPhone Development as COVID-19 Lockdown Hampers Schedule: Report

COVID-19 lockdowns in China led iPhone assembler Pegatron Corp to suspend operations at its Shanghai and Kunshan plants last month.

Apple Urges Chinese Suppliers to Speed Up iPhone Development as COVID-19 Lockdown Hampers Schedule: Report

Apple expects the manufacturing schedule and initial production volumes of the new phones to be hurt

Highlights
  • Apple supplier Pegatron suspended operations in China last month
  • Taiwanese supplier Foxconn is grappling with a severe shortage of chips
  • China's Covid-19 lockdowns are hampering at least one new iPhone model

Apple has told its suppliers to speed up iPhone development after China's strict COVID-19 lockdowns hampered schedule for at least one of the new phones, Nikkei reported on Wednesday, citing multiple sources with knowledge of the matter.

Lockdowns due to China's zero-COVID policy led iPhone assembler Pegatron to suspend operations at its Shanghai and Kunshan plants last month.

Financial hub Shanghai remains largely paralysed by a city-wide lockdown, which is now in its seventh week, while Beijing has ramped up quarantine efforts.

Apple last month forecast bigger problems as COVID-19 lockdowns snarled production and demand in China, with the war in Ukraine adding to the iPhone maker's woes.

In the worst-case scenario, Apple expects the manufacturing schedule and initial production volumes of the new phones to be hurt, the Nikkei business daily reported.

Apple and its suppliers Foxconn and Pegatron did not immediately respond to requests for comment from Reuters.

Earlier this month, Apple supplier Foxconn warned that current-quarter revenue for its electronics business including smartphones could slip as growth slowed amid rising inflation and cooling demand in locked-down China, as well as escalating supply chain issues.

The Taiwanese firm, the world's largest contract electronics maker, has grappled with a severe shortage of chips like other global manufacturers, which has hurt smartphone production including for its major client Apple.

While the company reiterated that COVID-19 controls in China only had a limited impact on its production as it kept workers on-site in a "closed loop" system, demand for its products in the country has suffered as people remain shut in. The slowdown has recently been exacerbated with a downturn in major markets due to high inflation and the war in Ukraine.

© Thomson Reuters 2022


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