On March 14, Foxconn notified all Shenzhen factories to suspend operations in order to cooperate with local pandemic prevention efforts.
The notice said that to cooperate with the local government’s COVID-19 pandemic prevention work, Hon Hai (Foxconn’s parent company) located in Shenzhen, mainland China, various parks (Longhua, Guanlan, etc.) suspended operations with immediate effect, with the actual resumption of work time pending notification by the local government. And the company has other backup plants and has made the necessary production deployment to reduce the impact on the company’s operations.
The notice also states that the company has initiated pandemic prevention measures such as nucleic acid testing for all employees in the park to protect the lives and health of employees in the park.
According to the “Shenzhen Release” on March 13, the Shenzhen Coronavirus Pneumonia Pandemic Prevention and Control Headquarters requested that from March 14 to 20, non-urban security enterprises should stop operating or work from home, and the city should stop all non-essential flows, buses and subways are out of service, and closed management is implemented in community areas and industrial parks.
Foxconn mainly has two parks in Shenzhen, Longhua Science and Technology Park and Guanlan Science and Technology Park. Among them, Shenzhen Longhua Science and Technology Park was put into operation in June 1996. It is Foxconn’s operation center and global manufacturing headquarters in mainland China, and it is also the first factory to land in mainland China. According to public information, the area of Longhua Science and Technology Park is about 2.3 square kilometers, and the area of Guanlan Science and Technology Park is about 2.95 square kilometers. In addition to the factory building, there are also living quarters such as staff apartments and restaurants. At its peak, there were more than 200,000 workers in Longhua Park alone.
Foxconn’s Longhua and Guanlan plants have IDPBG business group production lines, IDPBG is the “digital products business group”, which mainly produces mobile communication terminal equipment, and is mainly responsible for the OEM of Apple iPhone. the above-mentioned plants are also responsible for iPad, iMac and other products, the production of accessories and assembly work. In addition to Apple products, the said plant also produces other consumer electronics brands.
According to the report of Nandu, Foxconn said that the company has other backup plants and has made the necessary production deployment to reduce the impact on the company’s operation.
At present, Foxconn’s Zhengzhou plant is responsible for more than 90% of the global iPhone production work, Foxconn also said that the shutdown of the Shenzhen plant will not affect the normal operation of the iPhone supply chain.
SCC, which supplies Huawei, Apple, and Samsung, said on March 14 that the company has factories in Shenzhen, Wuxi, and Nantong. At present, the factories in Shenzhen have been affected by the pandemic, but the specific situation has yet to be evaluated. It will be implemented in accordance with local pandemic prevention policies, and products in this area include printed circuit boards (PCBs), electronic assemblies (PCBAs), etc. Today, SCC fell more than 5% on the Shenzhen Stock Exchange.
SMIC, the largest foundry in mainland China, also has an 8-inch wafer foundry line in Shenzhen with a process of 0.35µm-0.15µm. In March 2021, SMIC disclosed its Shenzhen expansion plan, which shows that SMIC Shenzhen will focus on the production of 28nm and above integrated circuits and the provision of technical services, aiming to achieve an eventual capacity of approximately 40,000 12-inch wafers per month, which is expected to production will begin in 2022.
Foxconn’s touch screen subsidiary, GIS, said in an announcement that its Shenzhen factory will shut down production from March 14, with all staff working from home and the exact time of resumption to be notified by the government. Similar to Foxconn’s approach, GIS, which supplies Apple and Samsung, is also allocating some of its production to other factories, with no significant impact on business in the preliminary assessment.
Meanwhile, China Taiwan’s largest printed circuit board manufacturer Unimicron said that its Shenzhen subsidiary will cease production from March 14. Unimicron is a major supplier to Apple, Intel and Nvidia. The company revealed that the affected subsidiary accounts for less than 3 percent of total revenue. Unimicron also told Nikkei Asia that one of its key products, ABF carrier boards, is not produced in the Shenzhen plant, so the shutdown will not exacerbate the severe global shortage of ABF carrier boards.
As for other mainland Chinese companies, Shenzhen Netac Technology, a GEM-listed mobile storage company, announced that the company’s plant was temporarily shut down due to the pandemic. The announcement disclosed that this is the second time in the first quarter of 2022 that Netac shut down production at the request of the government’s pandemic prevention policy. As this plant is the only production and testing plant of Netac, it is expected to delay the production and delivery of the company’s products, which may have a certain adverse impact on the recent production as well as operating results.
A staff member of TCL, an important supplier to the panel industry, said that the control of the pandemic in Shenzhen is decisive and local production and life are normal.
Although the current situation of the pandemic in Shenzhen is very serious, local Taiwanese businessmen still expressed optimism. According to Taiwan’s Economic Daily, on March 14, a hardware manufacturing Taiwanese businessman said that because the closure and control time is only one week, the real impact on the work time is only five days, and will not affect shipments and export shipments. He believes in the management ability of the city government, and also believes that the supply and distribution of rice, food, vegetables and meat can be done.
However, the Taiwanese businessman also mentioned that the most affected is the city center of Luohu, Futian, Nanshan District, the earliest implementation of the closure, which is also the most Taiwanese business gathering area, enterprises must bear the cost of product pressure, and employees are required to stay in the dormitory cost of living, coupled with rising raw materials, imported equipment and raw materials, he is worried that after the wave of the pandemic, production costs will have a significant increase. Source