China's Silicon Valley in Lockdown But Won't Affect iPhone Production

Sophie Webster, Tech Times 15 March 2022, 05:03 pm

China's Silicon Valley, Shenzhen, suffered a rise in COVID-19 cases, forcing the city to lockdown. Because of the situation, Foxconn had suspended its operations in the city, but it won't affect iPhone production.

China's Shenzhen on Lockdown

A J.P Morgan analyst said that Foxconn would deploy backup plans to reduce disruption. With that said, it seems it could impact no more than 10% of the iPhone production worldwide.

Analyst Gokul Hariharan told Reuters on Mar. 14 that they believe the impact from the Shenzhen lockdown on iPhone EMS should be limited because of the low season and small production exposure to Shenzhen.

Another proof that the lockdown won't impact iPhone shipments is that the Shenzhen region represents less than 20% of the total iPhone production capacity for Hon Hai, with the majority of assembly plants located in Zhengzhou, China's industrial and transport hub.

Also Read: iOS 15 Rumors: Bid Farewell to iPhone 6s and SE Gen 1-Leak Details iPhone 13 in the Works!

Also, a J.P Morgan analyst said that the problem is not the chip shortage, but it could hurt the global LCD panel supply.

It is important to note that Apple is releasing a new iPhone SE 3 within this week that uses an LCD panel. While orders for Apple's new phone have already slipped for April, it is still difficult to order some iPads online because of all of the shortages.

The iPhone SE 3 is expected to be responsible for 25% of Apple's iPhone sales in 2022. According to the Indian Business Today publication, Apple shipped up to 5.4 million phones in India. It is expected to cross the 7.5 million mark this year, thanks to the iPhone SE 3.

Prabhu Ram, the Head Industry Intelligence Group at CMR told Business Today that with the new iPhone SE 2022, Apple will seek to further build on its recent growth in the first quarter of launch, recording a 224% YoY growth, when compared to the earlier generation iPhone SE 2020.

The public will have to wait and see how the new lockdown in China will impact iPhone production and whether the semiconductor shortage or LCD panel supply issue could affect Apple in the future.

Apple's Chip Shortage Dilemma

In 2021, the sales of the iPhone 13 series were affected by the global chip shortage, which is the biggest concern for the tech giant dependent on a semiconductor chip for production.

The smartphones were launched in September 2021, but many of the models have become out of stock immediately, citing the country's demand. A report cites that it is unlikely that Apple would be able to meet the consumer demands this year.

According to Digitimes Asia, the global chip shortage demand is easing as suppliers increase production and the assemblers step up the manufacturing process to meet the demands in 2022.

Apple lost $6 billion dollars because of chip shortage in 2021, and the loss was greater in the last three months of 2021 during the festive season when people made new purchases.

Apple CEO Time Cook had said that the main reason for the supply chain-related shortages would be the chip shortage in the next couple of months.

Earlier this year, Apple's iPhone 13 is expected to have 5G connectivity.

In 2021, it was reported that Apple's iPhone 13 is reported to have 10 hours of battery performance.