A Covid-19 outbreak has shut down all production in Shenzhen, a city bordering Hong Kong and known as the Silicon Valley of China. With manufacturing and transportation at a standstill, popular products like the Galaxy S22 Ultra, MacBook Pro laptops and the iPhone 13 could all soon become increasingly hard to come by.
With the city of 17.5 million people now being asked to stop production (if it is deemed non-essential), the global source for most of the world’s gadgets is being put on hold, which could result in a frustratingly familiar scenario where new tech becomes harder to come by.
Foxconn has announced that it is closing its Longhua and Guanlan factories until further notice, and is especially notable as the world’s largest manufacturer of electronics, supplying brands such as Apple and Samsung. While Foxconn has several factories located around the world, The Verge reports that the Shenzen one is the second largest in China, where most production takes place.
Epidemiologist & health economist @DrEricDing claims that these new Covid restrictions in China have the potential to cause the world’s supply chain to “completely melt down for a period”.
I have a bad feeling again—China is reinstating measures & has fired the mayors of 2 key cities. Thus far, China has shut down an industrial city, urged residents not to leave Beijing and closed down schools in Shanghai due to increase of #COVID19. 👀 https://t.co/p6gBZcUvIS
— Eric Feigl-Ding (@DrEricDing) March 13, 2022
Other large brands will also be affected, such as Huawei, Tencent, and Oppo, which all have headquarters in Shenzhen. Hong Kong businesses, which are right across the border from Shenzhen, will also close, with at least 30 Taiwanese companies announcing that production will cease. Since these companies manufacture a variety of components, such as touchscreen modules, this will have a global impact in the coming months.
Currently, the ordered lockdown will only last for six days and should end on March 20, however, if infection rates stay low, this could be pushed back to April 2022. In an effort to prevent Covid from spreading, China has taken a particularly tough stance on lockdowns and other measures. Given that this is the worst outbreak since the pandemic’s peak back in 2020, we doubt that the situation will be taken lightly.
Analysis: Global tech supplies could become dicey again
China placed the 17.5 million residents of the southern city of Shenzhen into a lockdown — this is one of the world's most important manufacturing exports hubs, particularly for electronics (and the city is the 4th world's largest container port). https://t.co/kDMoxTAgJm
— Javier Blas (@JavierBlas) March 14, 2022
It is a depressing example of how easily the global supply chain can be disrupted, but it is also a prime example. It should not be possible for one city to shut down its businesses and production for the sake of safety, but this has a very real chance to do just that, as we have seen during the last two years of the ongoing Covid-19 pandemic.
A lack of physical production could not be the only problem either, as prices are likely to rise as products become harder to produce and more scarce. In addition to Apple and Samsung, this could have a knock-on effect for other brands, as components are widely produced in the region and go to factories outside the city.
The ongoing chip shortage worsened by the Covid-19 pandemic and caused everything from processors and graphics cards to games consoles like the PS5 to become harder to find at MSRP than gold dust. In the event of a worst-case scenario happening, there’s no immediate, easy solution, so it’s likely we will simply have to wait it out again.
According to the Financial Times, Foxconn has adjusted production elsewhere to “minimize the potential impact” of the regional lockdown, but that might not be sustainable long-term if the lockdown deadline is extended.
We’re not recommending that you buy all of the new gadgets you’ve been eyeing up in a panic to avoid being caught in a shortage, but to expect delays for upcoming product releases, as well as the possibility that physical and digital shelves could be empty of phones, laptops, and more in the coming months.