Foxconn, a major Apple Inc supplier and iPhone manufacturer, announced on Monday that it has halted operations in Shenzhen, China, in order to comply with local government COVID-19 control requirements.
Shenzhen, China's southern tech metropolis, has increased COVID-19 restrictions after reporting 60 new local cases with proven symptoms on Saturday, the city's highest since the first outbreak was suppressed in early 2020.
Foxconn, formerly known as Hon Hai Precision Industry Co, has said that it will set up backup plants to prevent production from being disrupted.
"We have altered the production line to minimize the potential damage because of our multiple production sites in China," the Taiwanese company said.
Foxconn has ordered all employees to take a PCR test and will restart operations in Shenzhen when the local government advises it to do so.
Chip substrate and printed circuit board maker Unimicron Technology Corp, another Apple supplier, and flexible printed circuit board maker Sunflex Technology Co Ltd were among the Taiwanese companies that announced they had halted operations in Shenzhen.
Sunflex's said manufacturing will be shut until Sunday.
While the shutdown may have an impact on many of the items Foxconn produces for Apple and other companies, demand for electronics normally troughs in the first quarter of each year after the holiday season.
On Monday morning in Taipei, Hon Hai shares were down as much as 1%.
The majority of Foxconn's manufacturing takes place in Zhengzhou, a city in central China that has earned the moniker "iPhone City." Its Guanlan location is on a smaller size.
The company was one of the first to be affected by the coronavirus outbreak two years ago, when it ordered employees to avoid its Shenzhen headquarters as a precaution.
On Sunday, China put Shenzhen's 17.5 million citizens on lockdown for at least a week in an attempt to contain a rising COVID-19 outbreak.
According to a government announcement, the shutdown would be accompanied by three rounds of citywide mass testing after viral cases nearly doubled statewide to about 3,400.
Shenzhen's central business district has previously been subjected to restrictions.
All bus and metro lines have been shut down, and all companies have shuttered except those that provide critical services.
Tencent Holdings, Huawei Technologies, and SZ DJI Technology Co all have headquarters in Shenzhen, which also has one of China's busiest ports.
