IPhone assembler Pegatron Corp (和碩) has suspended production at its Chinese plants in Shanghai and Kunshan, China, as the country’s policies to control the worst COVID-19 outbreak in two years disrupt global supply chains.
Resumption of output at the sites would depend on notifications from the Chinese government, Pegatron said in an exchange filing yesterday.
The company is continuing to assess the suspension’s impact on its finances.
Photo: Tyrone Siu, Reuters
The company makes iPhones in Shanghai and nearby Kunshan, both under lockdowns as China pursues its “zero COVID-19” strategy.
Pegatron had been able to keep production humming thus far as local governments allowed some manufacturers to maintain their operations with a closed-loop system that reduces the chances of workers getting infected.
Pegatron splits iPhone assembly orders in China with bigger Taiwanese rival Hon Hai Precision Industry Co (鴻海精密), known as Foxconn Technology Group (富士康科技集團) outside of Taiwan, and Chinese peer Luxshare Precision Industry Co (立訊精密).
Foxconn last month suspended some iPhone assembly work in Shenzhen for a few days because of COVID-19-related restrictions.
Shanghai on Monday said that it was partially easing a citywide lockdown, but majority of its residents are still subject to tight movement restrictions and local Chinese Communist Party chief Li Qiang (李強) vowed to continue measures to control the outbreak.
The weeks-long lockdown has triggered a food shortage and threatened to throw already fragile supply chains into further turmoil.
Kunshan’s local government said it would stick with existing COVID-19 prevention policies, despite a decline in the number of cases, asking residents to “make less fuss” and fully comply with the measures.
Local officials have reported three positive COVID-19 cases in Pegatron’s dormitory in Kunshan in the past four days.
Widespread Chinese lockdowns are exacting an unknown toll on the world’s No. 2 economy, where most electronics from iPhones to laptops and PCs are made.
While many of the most critical factories in cities such as Shanghai have managed to stay in operation, worsening logistics jams are constricting shipments of components, draining inventories to the point where some manufacturers including Pegatron are down to just a few weeks’ stocks, consultancy TrendForce Corp (集邦科技) estimated.
In total, 161 Taiwanese companies have suspended production amid COVID-19 lockdowns in Shanghai and Kunshan, the Financial Supervisory Commission (FSC) said on Monday.
The companies have activated contingency plans, such as adjusting production schedules or processes and outsourcing production to other factories, Securities and Futures Bureau Director-General Sam Chang (張振山) told a meeting of the legislature's Finance Committee in Taipei.
None of the companies have reported being significantly affected financially by the closures, he said.
Chang was answering a lawmaker’s question about the effects of the lockdowns, which have been in place in Shanghai since late last month and in Kunshan since early this month.
Chinese Nationalist Party (KMT) Legislator Lee Guei-min (李貴敏) asked FSC Chairman Thomas Huang (黃天牧) if there was any chance that companies were not reporting the full extent of the lockdowns’ effects on their operations, which could pose a risk to investors.
Huang said that each company has to judge for itself whether its situation meets the materiality threshold for issuing a statement through the Taiwan Stock Exchange, adding that the exchange would pursue legal action in the event of false reporting.
Additional reporting by CNA
SECOND-RATE: Models distilled from US products do not perform the same as the original and undo measures that ensure the systems are neutral, the US’ cable said The US Department of State has ordered a global push to bring attention to what it said are widespread efforts by Chinese companies, including artificial intelligence (AI) start-up DeepSeek (深度求索), to steal intellectual property from US AI labs, according to a diplomatic cable. The cable, dated Friday and sent to diplomatic and consular posts around the world, instructs diplomatic staff to speak to their foreign counterparts about “concerns over adversaries’ extraction and distillation of US AI models.” Distillation is the process of training smaller AI models using output from larger, more expensive ones to lower the costs of training a powerful new
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have repeatedly hit new highs, but an equity analyst said the stock’s valuation remains within a reasonable range and any pullback would likely be technical. The contract chipmaker’s historical price-to-earnings (P/E) ratio has ranged between 20 and 30, Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) told Central News Agency. With market consensus projecting that TSMC would post earnings per share of about NT$100 (US$3.17) this year, supported by strong global demand for artificial intelligence (AI) applications, and the stock currently trading at a P/E ratio of below 25, Tsai said the valuation
The artificial intelligence (AI) boom has triggered a seismic reshuffling of global equity markets, with Taiwan and South Korea muscling past European nations one by one. With its stock market now valued at nearly US$4.3 trillion, Taiwan surpassed the UK, Europe’s biggest market, earlier this month, data compiled by Bloomberg showed. South Korea is about US$140 billion away from doing the same. The tech-heavy Asian markets have shot past Germany and France in the past seven months. The shift is largely down to massive gains in shares of three companies that provide essential hardware for AI: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電),
The US Department of Commerce last week ordered multiple chip equipment companies to halt shipments of certain tools to China’s second-largest chipmaker, Hua Hong Semiconductor Ltd (華虹半導體), its latest action to slow the country’s development of advanced chips, two people familiar with the matter said. The department sent letters to at least a handful of companies informing them of restrictions on tools and other materials destined for two Hua Hong facilities US officials believe make China’s most sophisticated chips, the people said. Top US chip equipment companies Lam Research Corp, Applied Materials Inc and KLA Corp, each of which has significant
RSS