What Forced Pegatron to Suspend Production in Shanghai?

Pegatron and other companies from China have to cope with various challenges created by the Covid-19 outbreak in the country. Apple’s iPhone assembler suspended production in Shanghai as well as the nearby city of Kunshan amid strict Covid-19 prevention measures. 

It is the latest hit to Apple, which recently announced a number of new products including a budget iPhone. For instance, the company announced its new Studio Display in March.

Authorities in the country’s commercial hub imposed stringent stat-at-home measures. They have to cope with the worst outbreak since the initial phase of the pandemic in early 2020. Those government lockdowns, which began in March, threatened to disrupt global supply chains. The ongoing situation in the country shows the risks associated with Apple’s reliance on manufacturing in China.

It is hard to undermine Pegatron’s role in Apple’s business empire. Pegatron assembles about 20% to 30% of iPhones produced in the world. The company had been able to continue production until now because the government of China allowed some manufacturers to keep operations going via a closed-loop system to reduce the chances of infections. 

Pegatron and Foxconn 

Pegatron is not the only Taiwanese company that is trying to adapt to the situation in China. In March, Foxconn, a major assembler of iPhones, suspended full operations. It produces some iPhones, iPads, as well as Macs in Shenzhen. However, Foxconn since “basically” resumed normal operations. 

The company at the time said it would adjust its production line to other locations to minimize the impact. Almost 50% of iPhones are produced in a factory located in Henan province, based on the information taken from Bank of America’s research note. 

However, Pegatron’s only iPhone manufacturing facilities are in Shanghai and Kunshan. Pegatron also plans to operate a factory in India. Nevertheless, its new iPhone assembly line in India has not yet started operations.