May 23, 2022

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Shenzhen shutdown: Foxconn halts operations as Covid hits tech hub

Shenzhen shutdown: Foxconn halts operations as Covid hits tech hub

The world’s second largest economy continues to pursue persistently Zero covid strategyEven as other countries reopen and try to live with the virus. Lockdowns in major Chinese cities will not only affect the country Recovery after the pandemicbut can deal a new blow for global supply chains.
The southern city of Shenzhen, bordering Hong Kong, is home to Chinese tech giants such as Tencent (TCEHY) And Huawei. It imposed a week-long lockdown from Monday, after recording 66 positive cases on Saturday.

in her statement Submitted to CNN Business on Monday, Foxconn said the date for the plant’s resumption will be notified by the local government.

Foxconn has two main campuses in Shenzhen. It added that the Taiwanese company had “adjusted” its production line to other locations to “reduce the potential impact” of the disruption. He did not elaborate on which sites would take on additional work.

Shares in Taipei-based Foxconn Interconnect Technology, a Foxconn subsidiary, fell 9.8% in Hong Kong on Monday.

China struggles with worst outbreak of Covid since The original outbreak in Wuhan In early 2020 as cases all over the country. On Sunday, it reported 2,125 local cases of Covid-19 in 58 cities, according to the National Health Commission (NHC).

In Shenzhen, all businesses – except for those considered essential or involved in supplying Hong Kong – have halted operations or implemented work-from-home policies.

Public transportation, including subways and buses, has been suspended in the city of 17.5 million people.

Shenzhen is also home to one of the world’s largest container ports, and any disruption there could damage an already stressed global supply chain. Last summer, Yantian port in Shenzhen Had to Closed for about a week After injuries were discovered among dock workers, causing a massive backlog of merchandise that took months to clear and global freight rates soaring. So far the port is still working.
Shares of Shenzhen-based major companies underperformed in Hong Kong on Monday. Tencent sank 9.8%. telecom company ZTE (ZTCOF) 7% lost. BYD (BYDDF), the largest electric vehicle maker in China, fell 8.3%. And the AAC Technologies (AACAF)maker of audio components, down 9%.

Apart from Shenzhen, Local authorities have also closed off the northeastern industrial zone of Changchun since Friday, with nine million residents banned from leaving their neighborhoods.

China Xi & # 39;  Shutdown hits some of the world's biggest chip makers

Shanghai, the country’s largest mall, has imposed strict measures after a spike in Covid cases, closing schools and cinemas and restricting travel to the city.

These closures come just months after China shut down the northwestern city Xi’anwhich affected key business operations, including those of Samsung and Micron, two of the world’s largest chip makers.
These strict measures taken to control the epidemic have severely affected China’s economy in recent times. Earlier this month, the government Determine the goal of economic growth At about 5.5% for 2022, the lowest official target in decades.

CNN’s Beijing bureau contributed to this report.