Foxconn, one of Apple's biggest suppliers, announced Wednesday that it had partially resumed production in a key Chinese city after new COVID-19 restrictions forced the company to temporarily suspend operations.
Beijing imposed a seven-day lockdown of Shenzhen, a key port city sometimes referred to as the "Silicon Valley of China," as it pursues a zero-COVID strategy. Shenzhen is home to Foxconn as well as Tencent and Huawei.
A Foxconn spokesperson told FOX Business on Wednesday that the company has started applying a "closed-loop management process" at its campus in Shenzen in order to restart some halted operations.
"In applying this closed-loop management process within the Shenzhen campus and in implementing the required health measures for the employees who live on campus, some operations have been able to restart and some production is being carried out at those campuses," the spokesperson said. "The company will continue to work closely with the relevant authorities in monitoring these operations very closely."
Foxconn earlier this week said that it had suspended factory lines in Shenzhen because of the ban on nonessential work, but that it shifted production to a different location in China that has not been affected by the latest restrictions in order to minimize the potential impact.
Chinese authorities reported 3,507 locally transmitted cases of coronavirus across dozens of mainland cities on Tuesday, an outbreak driven by the fast-spreading "stealth variant" of BA.2, a subvariant of omicron. Shenzhen reported 86 new cases; the lockdown affects roughly 17.5 million people who live in the city, which neighbors Hong Kong.
The move threatened to further inflame an already snarled global supply chain, which has contributed to the highest inflation in the U.S. since 1982. The Labor Department reported last week that consumer prices surged 7.9% in February from the previous year – driven in part by a shortage of electronics.
Foxconn's factory in Shenzhen produces iPhones, Macs and iPads. But more than half of iPhones are produced at a separate factory in the Henan province, according to a Bank of America research note published on Monday.
"Apple/Foxconn have the ability to relocate production to other areas in the short term provided that there is not a significantly higher duration of lockdown," the Bank of America economists wrote. "An increased period of shutdowns can cause ripple effects at other components that can create a shortfall in production."
Another manufacturing hub hit by new lockdown measures is Changchun, located in the northeast part of the country. The restrictions have affected Volkswagen AG, which halted production at its vehicle and component plants in the city from Monday through Wednesday, as well as Toyota, which halted production at its plant on Monday and will resume once the government gives the green light.