Apple, Toyota, and Volkswagen all shut down factories.

New coronavirus lockdowns in China are stifling the production of everything from Apple iPhones to Toyota SUVs, threatening to exacerbate already-rising global inflation. Key Apple suppliers, including Foxconn, have been forced to close factories in Shenzhen, where iPhones, iPads, and Mac computers are manufactured after the regional government imposed a lockdown on the city on Sunday.Non-essential work will be prohibited in Shenzhen, China’s Silicon Valley and home to major tech firms such as Tencent and Huawei, for at least one week.

“The lockdown couldn’t have come at a worse time or in a worse city,” Wedbush Securities managing director Dan Ives told The Washington Post. “If this continues for more than a week or two, it will be a setback for production.”

Foxconn did not immediately respond to a request for comment, but the company told the Wall Street Journal that it is shifting production from Shenzhen to unlocked factories elsewhere in China to help meet demand.

The ban comes just days before Apple is set to release new versions of its lower-cost iPhone SE and iPad Air.

The Foxconn layoffs come just days before Apple plans to release new versions of its lower-cost iPhone SE and iPad Air, as well as other new products. According to Ives, the immediate rollout of those devices should be unaffected because they have already been shipped.

However, an extended lockdown would have an impact on both the iPhone SE and Apple’s flagship iPhone 13, according to the analyst.

“In the end, Apple doesn’t have a demand problem; they have a supply problem that has gotten worse,” he explained.

Shenzhen lockdown

Authorities in Shenzhen, China, have declared a state of emergency for at least a week.
Publishing in the Future
Apple did not respond immediately to a request for comment. The stock was trading down 1.6 percent at $152.23 early Friday, despite the fact that the S&P 500 index was up 0.2 percent.Meanwhile, another lockdown in Changchun, northeastern China, is causing problems for at least two major automakers.

Toyota’s plant in the region, which manufactures RAV4 SUVs, was shut down indefinitely beginning Monday, according to spokesperson Shiori Hashimoto.

China lockdown

Toyota and Volkswagen plants in the northeastern Chinese region of Changchun are closed.
Future Publishing

“We intend to resume operations as soon as the government’s instructions are received, as well as the safety and security of the local community and our business partners,” Hashimoto said. “At this time, other plants’ operations are unaffected.”

Volkswagen plants in the region that typically produce sedans under both the Volkswagen and Audi brands were closed on Monday, according to spokesperson Leslie Bothge. She stated that the company anticipates the shutdown will last until at least Wednesday.

An ongoing chip shortage in 2020 and 2021 stymied auto plant production and sent vehicle prices skyrocketing, contributing to overall inflation. Continued scarcity of new cars may contribute to high inflation in 2022.

The new wave of lockdowns also sent shivers through Chinese technology stocks. On Monday, Alibaba shares fell 9%, while Tencent shares fell 5.2 percent. The broad Shanghai Composite Index fell 2.6 percent.

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Akanksha Jain

Akanksha Jain love to learn new stuff every day. With a background in computer science and a passion for writing, she loves writing for Startup, Business sections of Editorials99.

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