Pegatron, Apple's iPhone maker, announced that it suspended production in Shanghai and the city of Kunshan amid strict COVID-19 prevention measures.
Pegatron Suspends Operations
Chinese authorities have imposed stringent stay-at-home COVID-19 measures as mainland China faces its worst COVID outbreak since the early phase of the pandemic in 2020.
The government lockdowns, which started in March, have negatively affected the global supply chains. It shows the risks linked the Apple's reliance on manufacturing in China.
Pegatron assembles around 20% to 30% of all iPhones, according to Nikkei Asia.
The Taiwanese company had been able to continue the production of iPhones until now because the Chinese government allowed manufacturers to keep the operations going through a closed-loop system to reduce the chances of infections, according to Bloomberg.
Wedbush analyst Dan Ives told CNBC that Pegatron closures could affect the supply chain for Apple and other parts of the iPhone ecosystem.
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Ives said that this is not the news the public wants to hear as it amplifies the supply chain issues for iPhones just as Apple saw an improvement.
Shares of Apple increased more than 1% in the morning of Apr. 12, suggesting investors are not at all concerned about the reports of a suspension of production.
This is the latest hit to Apple, which just announced its slate of new products, including a budget iPhone. In March, Foxconn, a major assembler of iPhones, suspended full operations. It has since resumed normal operations, according to Reuters.
Foxconn said that it would adjust its production line to other locations to help minimize the impact.
The relationship between Pegatron and Apple has not always been smooth-sailing.
In 2013, Pegatron blamed Apple's iPhone 5C production on the company's profit issue.
In 2016, Pegatron was accused of exploiting workers.
iPhone Production in India.
Almost 50% of iPhones are produced at a factory in Henan, but Pegatron's only active iPhone manufacturing facilities are in Shanghai and Kunshan. The new iPhone assembly plant in India has not yet begun its operations.
In April, the iPhone 13 production is expected to start in Chennai, India. This was scheduled to happen back in January, but it was pushed back after the tech giant placed the facility on probation after the employees complained about the working conditions.
This is just one of the several issues that the tech giant has faced as it continues its efforts to reduce its dependence on China for iPhone manufacturing.
Two different iPhone plants in India, run by different companies, have had their production suspended after Apple investigated complaints by the employees.
In December 2021, there was a riot by the employees and factory workers who had not received their full pay at a Wistron plant. The damage was estimated to cost around $60 million. However, Apple and the Indian government investigated the incident, each upholding the worker complaints.
Foxconn has now resolved the poor working conditions, as India's Business Standard reports that iPhone 13 production will start in April.
It is not known what proportion of the phones made there will be for the export market, but the tech giant is working toward a diverse iPhone assembly network around the world.
According to Ben Lovejoy of 9to5Mac, the Ukraine crisis served to highlight the company's unsustainable dependence on China.
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Written by Sophie Webster
