Phone shortages could get worse as Foxconn halts Shenzhen operation

What you need to know

  • Foxconn has suspended its production in Shenzhen after authorities placed the city under lockdown along with Shanghai.
  • The new restrictions are expected to deal another major blow to the global supply chain.
  • Authorities ordered the suspension of non-essential businesses until March 20.

The smartphone industry is already taking a hit from the ongoing chip shortage, causing delays in shipments of many of the best Android phones. As if that was not enough, the global supply chain is about to get even worse.

Foxconn, among other manufacturers operating in Shenzhen, has been forced to halt its production in the city amid the rising COVID-19 cases, according to Nikkei Asia. China has placed the city under lockdown from Monday through March 20.

The lockdown means all nonessential businesses will temporarily stop operations, except for pharmacies, medical institutions, and other essential businesses. China has so far reported 60 locally transmitted coronavirus cases in Shenzhen and 64 in Shanghai, Nikkei reported.

China has also halted public transportation in the city and is requiring around 17 million residents to undergo PCR tests as it combats the spread of the virus.

Shenzhen is home to Foxconn’s second-largest manufacturing operation in China. The electronics giant is also among the major suppliers to tech giants such as Apple, Intel, Nvidia, and Samsung.

General Interface Solution Holding, which supplies touch panels to Samsung, and Unimicron, which builds printed circuit boards, are also halting operations in Shenzhen.

The latest restrictions affect Foxconn’s operations at its Longhua and Guanlan factories, sparking fears that they may also deal another huge blow to smartphone inventories in return. Huawei and Oppo are also headquartered in Shenzhen.

IDC reported last year that the global smartphone market fell 6.7% in the third quarter of 2021 due to the chip shortage.

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