Shenzhen lockdown will not have a big impact on iPhone production - J.P.Morgan

FILE PHOTO: The Apple logo is seen at an Apple Store, as Apple's new 5G iPhone 12 went on sale in Brooklyn, New York, U.S. October 23, 2020. REUTERS/Brendan McDermid

Apple Inc's iPhone production will not take a big hit from Foxconn's suspension of operations in the Chinese city of Shenzen, which is facing fresh curbs to contain a COVID outbreak, J.P. Morgan analysts said.

Apple's key supplier Hon Hai Precision Industry Co Ltd, known as Foxconn, said it had suspended operations in Shenzhen until further notice and would deploy backup plants to reduce disruption.

"We believe the impact from the Shenzhen lockdown on iPhone EMS build should be limited (~10per cent maximum of global iPhone production), due to low season and small production exposure to Shenzhen," analyst Gokul Hariharan wrote in a note dated Monday.

J.P.Morgan also said the Shenzhen region represents less than 20per cent of total iPhone production capacity for Hon Hai, with vast majority of assembly plants located in Zhengzhou, an industrial and transport hub.

Many factories in China, including plants run by automakers Toyota and Volkswagen, were suspended due to the restrictions.

The brokerage does not anticipate an industry-wide restocking for components due to these production suspensions, but warns that lockdowns in the Shanghai region could be more disruptive.

The lockdown in Shenzhen, China's Silicon Valley, will not have a big impact on semiconductor production, it said, while adding that global LCD panel supply could be hurt.

(Reporting by Karina Dsouza in Bengaluru; Editing by Anil D'Silva)

 This article was originally published on CNA, 15 March 2022. Its inclusion on this website is solely for education purposes. 

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