Approximately half of Apple’s 200 major suppliers have manufacturing sites in or around Shanghai, which is now a quarantine zone closed due to the COVID-19 outbreak in China, Nikkei Asia found.

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It is known that more than 70 companies operate in Jiangsu province, supplying the American manufacturer with the necessary components. Most of them are located in Kunshan and Suzhou, neighboring cities of Shanghai, and 30 more are in Shanghai itself. We are talking about both large iPhone and iPad assemblers like Pegatron and Compal Electronics, as well as manufacturers of displays, printed circuit boards, batteries and other components.

Moreover, most of these suppliers serve not only Apple , but also other global IT giants, from foreign Google, Microsoft and Intel to local Huawei, Xiaomi and Oppo. Experts do not exclude that the extension of the quarantine will jeopardize the economic growth of China in general and some industries in particular. The Chinese authorities have already taken this factor into account and have instructed local authorities not to block key transport arteries. Authorities in Shanghai and Suzhou have also contributed hundreds of local businesses to the so-called. “white list”, allowing the gradual restoration of production and logistics. However, with China’s strict policy on COVID-19 restrictions, it is expected to take months to restore normal operations.

Image Source: Nikkei Asia

According to some reports, the negative effect of the outbreak is much more serious than last year – interruptions in supply and production do not concern only one company or industry, but, in fact, are global in nature. Sometimes there are not enough elementary but necessary things like cardboard for packaging.

Nevertheless, for now, the ports and airports of Shanghai continue to function, but under strict sanitary control, which undoubtedly hinders normal operation. According to logistics companies, the Yangtze River Delta is currently experiencing a “stagnation” in shipments, with some pessimistically saying it could disrupt the fall/winter holiday sales season if some goods don’t leave ports in May or June due to terminals are overloaded, they will have to be sent by plane in time for Christmas, and the cost of delivery will be much higher.

Another unpleasant factor for manufacturers is that sanitary restrictions will affect not only the supply of components and finished products, but also demand, because a significant part of the consumers of products are located in China itself, which is suffering from an outbreak of infection.