Pegatron is one of Apple’s largest supply partners. The company recently announced that it will cut production of communications equipment and consumer electronics this quarter, as operations at its Shanghai assembly plant have been affected by the city’s lockdown measures. The Taiwanese enterprise did not detail the volume of products that were reduced.
According to Ivan Lam, senior analyst at research firm Counterpoint, new iPhone models, including the iPhone SE, may record a decrease in production in the second quarter due to supply chain disruptions in the mainland.
Last month, Pegatron halted production at major factories in Shanghai and Kunshan. The Con Son factory has resumed operations after the city lifted some disease control measures. However, operations in Shanghai remain tense. However, authorities are set to relax some measures to contain Covid-19 on May 20, when the target of no new infections outside the community is reached.
SCMP said that the Taiwanese contractor’s decision to cut output will cause Apple to continue to adjust its supply chain strategy in China. More than half of Apple’s 192 suppliers are located on the mainland, including Foxconn, Pegatron, Quanta Computer, Wistron and Compal Electronics. All are in the blockade area.
Previously, Apple estimated that supply chain stress would cause sales losses of up to $8 billion in the second quarter. During the earnings call, CEO Tim Cook said the company continues to find ways to optimize the supply chain. He confirmed that the main cause of the stress is the continuing semiconductor crisis and disruption related to Covid-19.
Foxconn, another major Apple assembly partner, is also grappling with difficulties caused by Covid-19. Most of the company’s mainland factories continue to produce in a “closed bubble,” meaning employees eat and sleep at the factory. Foxconn also makes great efforts to liaise with local authorities. Quanta, the main MacBook assembly unit, also had to suspend production at its Shanghai, Chongqing, Jiangsu factories due to Covid-19 containment measures.