Thu, Apr 07, 2022 page12

• Shanghai lockdown upends businesses

  SLEEPING AT WORK: In Kunshan, many factories have distributed sleeping bags to employees and are having them work in shifts to meet their production deadlines

  • Bloomberg
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  Tesla Inc’s factory shutdown has stretched out to at least 12 days, much-needed semiconductors are piling up at manufacturers amid a shortage of truck drivers and bankers are camping in their offices as Shanghai’s COVID-19 lockdown disrupts businesses in the city.

  The lockdowns and virus containment measures threaten to slow the nation’s economic growth this year to below the Chinese government’s 5.5 percent target, Bloomberg Economics said.

  They also risk further havoc on already stressed global supply chains, with companies from chip giant Semiconductor Manufacturing International Corp (SMIC, 中芯國際) to a South Korean noodle maker caught up in the fallout.

  

  Health workers on Tuesday unload supplies for local residents during a COVID-19 lockdown in Shanghai.

  Photo: AFP

  Electric vehicle pioneer Tesla on Tuesday told some suppliers and workers that its Shanghai factory — which has been shuttered since the city went into a phased lockdown on Monday last week — would remain closed at least through today, people familiar with the matter said.

  Following a separate two-day shutdown last month, Tesla has now lost 12 days of production in the past few weeks, including the Tomb Sweeping Day break.

  The first Tesla Gigafactory outside the US produced half of the company’s vehicles last year. It produces not just for the lucrative Chinese market, but for export to Europe and elsewhere in Asia.

  Some tech companies, including chip giants Taiwan Semiconductor Manufacturing Co (台積電) and SMIC, as well as iPhone assembler Pegatron Corp (和碩) have kept plants running by implementing a so-called closed-loop system where workers live on-site and are tested regularly.

  Shanghai initially launched its two-stage lockdown starting with its eastern districts for five days, then its western districts for five days. It had been scheduled to be lifted on Tuesday.

  The lockdown has since been extended to cover the entire city indefinitely.

  Taiwanese businesses in Shanghai said they were making adjustments to continue operating amid the lockdown, but warned that severe logistics problems there could derail their efforts, the Central News Agency reported on Monday.

  In Kunshan, which is under lockdown until tomorrow, many factories have “distributed sleeping bags” to employees and are having them work in shifts to meet production deadlines.

  Still, the situation is likely to take an economic toll, an industry source said, especially among Taiwanese printed circuit board manufacturers, whose production capacity is heavily concentrated in Kunshan.

  Kunshan factories account for 60 percent of the capacity of Taiwan’s Dynamic Electronics Co (定穎電子), 50 percent of the capacity of Flexium Interconnect Inc (台郡科技), 40 percent of the capacity of Nan Ya Printed Circuit Board Corp (南亞電路板), 25 percent of the capacity of Elite Material Co (EMC, 台光電子材料) and 20 percent of the capacity of Unimicron Technology Corp (欣興電子), a source said.

  Of those companies, Nan Ya PCB, EMC and Unimicron have all halted operations during the lockdown, while others had already scheduled closures for Tomb Sweeping Day, thus limiting the impact on their operations, the source said.

  South Korean companies are also being affected, with operations at the Shanghai plants of noodle maker Nongshim Co, confectionery manufacturer Orion Corp and cosmetics producer Amorepacific Corp suspended.

  Singapore’s Spindex Industries Ltd (事必得工業), which supplies precision components used by the automobile industry, has extended the closure of its Shanghai plant until Sunday or whenever local authorities allow work to resume.

  Additional reporting by CNA
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