A recent Covid-19 outbreak has locked down all production in Shenzhen, a city that borders Hong Kong and is notable for being 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 much harder to find in stock.
With the city of 17.5 million people now being asked to suspend production (if the business is deemed to be non-essential), the global source for most of the world's gadgets is being brought to a standstill, which could result in a frustratingly familiar scenario where new tech becomes harder to get our hands on.
Foxconn announced that it’s stopping production at its Longhua and Guanlan factories until further notice, and is especially notable as the world’s biggest manufacturer of electronics, supplying aforementioned brands such as Apple and Samsung. While Foxconn has several factories located around the world, The Verge (opens in new tab) reports that the Shenzen one is the second largest in China, which is where a majority of production takes place.
Epidemiologist & health economist @DrEricDing (opens in new tab) 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".
2) If mainland China 🇨🇳 follows the way of Hong Kong 🇭🇰 — then China will be royally screwed. And the world’s supply chain might completely melt down for a period. HK deaths are surging so high it is approaching NYC in spring 2020–and HK hasn’t peaked yet.pic.twitter.com/jQzNhYZ9PAMarch 13, 2022
Other large brands are also going to be affected as Huawei, Tencent, and Oppo all also have headquarters in Shenzhen. Even businesses that neighbour Hong Kong, which is just across the border from Shenzhen, are expected to close, with at least 30 Taiwanese companies having announced that production will halt. Given these companies produce a lot of components such as touchscreen modules, this is going to have a knock-on effect across the world over the coming months.
Right now, the ordered lockdown is only scheduled to last for six days and should end on March 20, but this is providing that infection rates are kept low and it's likely this could be pushed back into April 2022. China has taken a particularly firm stance on lockdowns and measures to prevent Covid from spreading. And with this latest outbreak being the worst seen since the height of the pandemic back in 2020, we doubt the situation will be taken lightly.
Analysis: Global tech supplies could get 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/kDMoxTAgJmMarch 14, 2022
This is a depressing, but a prime example, of just how easily the global supply chain can be disrupted. One city closing down businesses and production to keep its citizens safe shouldn't bring the worldwide supply of in-demand technology to its knees, but this has a very real chance to do just that, as we've seen throughout the last two years of the ongoing Covid-19 pandemic.
It's not just the lack of physical manufacturing that could cause issues either, with prices likely to inflate as products become harder to produce and more scarce. This could have a wider knock-on effect to other brands outside of Apple and Samsung too, as components are widely produced throughout the region that go onto factories outside of the city.
We've seen this happen with the ongoing chip shortage, which was exacerbated by the Covid-19 pandemic and caused everything from processors, graphics cards and games consoles like the PS5 to become harder to find at MSRP than gold dust. There's no immediate, easy solution, unfortunately, so if the worst-case scenario does come to fruition, It's likely we'll simply have to wait it out again.
As reported by the Financial Times (opens in new tab), Foxconn claims the company has adjusted production elsewhere to “minimize the potential impact” of the regional shut-down, but that might not be sustainable long-term if the current lockdown deadline is extended.
We wouldn't suggest you rush out and buy all the gadgets you've been eyeing up in a panic to avoid being caught in any shortages, but expect that delays for upcoming product releases may occur, alongside the chance that both physical and digital shelves could be empty of phones, laptops and more in the coming months.