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COVID Curbs in China Threaten Supply Chain Paralysis

China’s race to stop the spread of COVID-19 is clogging highways and ports, stranding workers and shutting countless factories – disruptions that are rippling through global supply chains for goods ranging from electric vehicles to iPhones.

While some factory owners try to tough it out through “closed loop” management that keeps workers isolated inside, some said that is becoming harder to sustain given the extent of local COVID-19 curbs aimed at heading off the Omicron variant, complicating efforts to procure materials or ship products.

Foxconn Interconnect Technology, a unit of Taiwan-based Foxconn that makes data transmission equipment and connectors, has kept a plant open in Kunshan, which borders Shanghai, in a closed loop but is only able to run at 60 percent capacity, a person familiar with the matter said.

Foxconn did not respond to a request for comment.

On Wednesday, more than 30 Taiwan companies, many making electronics parts, said that COVID-19 measures in eastern China had led them to suspend production until at least next week.

A day earlier, German auto parts giant Bosch said it suspended output at sites in Shanghai and Changchun, while putting two other plants under “closed-loop” operation. Also on Tuesday, Taiwan’s Pegatron, which assembles Apple iPhones, halted operations in Shanghai and Kunshan.

Sven Agten, Asia Pacific CEO of Rheinzink, a German maker of zinc construction materials, said logistical challenges make a closed-loop unworkable at his Shanghai warehouse and manufacturing facilities, and expects to have zero sales during April and possibly May.

To read the full report from Reuters.com, click here.

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