Apple’s iPhone manufacturing will not be hampered by the closure of Shenzen, according to JP Morgan.
According to J.P. Morgan analysts, it seems unlikely that Foxconn’s stoppage of operations in Shenzhen, China, will have a significant impact on Apple Inc.’s iPhone manufacturing.
As a precaution, Hon Hai Precision Industry Co Ltd, better known as Foxconn, Apple’s primary supplier, announced that it had temporarily halted operations in Shenzhen and will set up backup facilities.
Although Shenzhen’s lockdown will have some impact (10% maximum of worldwide production), analysts believe it will be minimal because of the low season and the relatively modest exposure to Shenzhen that analyst Gokul Hariharan wrote about on Monday.
While the Shenzhen region accounts for less than 20% of Hon Hai’s overall iPhone production capacity, the great majority of assembly factories are located in Zhengzhou, an industrial and transportation hub.
There were several factories in China that were put on hold because of the limitations, including Toyota and Volkswagen plants.
While these production halts are not expected to have a widespread impact on component availability, the brokerage warns that lockdowns in the Shanghai area could be more disruptive.
Although the lockdown in China’s Silicon Valley will not have a major impact on semiconductor production, it added that the global supply of LCD panels could be negatively affected.