As Beijing has tightened its Covid-combating measures since the latest wave of outbreaks, Apple’s suppliers in China have faced significant disruption to their operations.
This undoubtedly hurts Apple’s sales as the company heavily depends on the second-largest-world economy for its production.
In April, the tech giant announced that the resurgence of Covid in China could decrease its sales by about 8 billion dollars in the current quarter.
As many provinces in China are under lockdown, maintaining a smooth supply chain became a problem for Apple.
Nikkei Asia reported that half of Apple’s suppliers are in Covid-hit lockdown areas. About half of its 200 top suppliers are located in and around financial hub Shanghai, where lockdowns and traffic restrictions are hurting business operations.
According to an analysis of Apple’s Supplier List, the company has over 70 suppliers in Jiangsu Province. Many on the list are in Kunshan and Suzhou city, near Shanghai. About 30 Apple suppliers are located in Shanghai itself.
Pegatron Corporation, Apple’s second-largest iPhone foundry, shut down its plants in Shanghai and the neighboring city of Kunshan production to comply with Covid restrictions. The company makes about 20% to 30% of iPhones.
Quanta, a major MacBook component supplier, also suspended its production at its key manufacturing site in the Songjiang district, Shanghai earlier in April.
Foxconn’s plant in the Shenzhen province had to suspend operations in March following Beijing’s directions of pandemic control.
According to the Wall Street Journal, Apple makes 90% of its products using parts from contractors in China.
The Journal reported that Apple notified its contract manufacturers about plans to increase its production outside China, partially because Beijing’s strict lockdown measures hurt its business in the country.
Last year, Apple reclaimed its top market share in China with 23%, beating local giants like Oppo, Vivo, and Huawei.