Tech supply chains threatened as China’s Silicon Valley goes into lockdown

Several of China’s largest factory cities have placed fresh restrictions on business activity to fight a new Covid outbreak, driven by the Omicron variant, halting production of smartphones, gaming devices, electric vehicles and car components.

Areas affected include Shenzhen, where a lockdown has been imposed on the city for a week, while health authorities administer COVID tests to the city’s 17m residents and try to limit the virus’ spread.

Referred to as China’s Silicon Valley, Shenzhen plays host to prolific Taiwanese corporation Foxconn – which assembles the majority of iPhones for Apple and has new deals in the automotive industry with Fiat Chrysler and US start-up Fisker to help develop and produce EVs.

Other suppliers based in China’s locked down tech hub include two printed circuit board makers: Unimicron Technology Corp (another Apple as well as Intel supplier) and Sunflex Technology.

All firms based in the city have temporarily halted their operations until further notice, although Sunflex said its plant would be closed until Sunday.

According to Reuters, Foxconn – which also has factories in India, Vietnam, Brazil, and Mexico – is arranging backup plants to minimize disruption to production.

Tech giants Tencent and Huawei are also based in Shenzhen, while Chinese EV and battery cell maker BYD is reportedly experiencing production issues at its Shenzhen factory as a result of lockdowns, according to Bloomberg.

Car manufacturing is also being hit by another lockdown in Changchun city, located in the north-eastern Jilin province, which has led to the suspension in production in plants for both Toyota and Volkswagen through their separate joint ventures with China’s FAW Group.

China has reported more local symptomatic COVID-19 cases this year than in last year – with the National Health Commission stating that reported figures stood at 9,000 symptomatic cases this year so far – compared to 8,000 for the whole of 2021.