China’s Covid-19 lockdowns lead to shipment delays for Lenovo, Dell and Apple

Certain products, including laptops from Dell and Lenovo, as well as some Apple goods will face another round of shipments delay if lockdowns in China continue. Assemblers are shutting down factories and closed-loop chains are once again becoming difficult to operate.

China’s harsh quarantine measures in an attempt to stop the spread of coronavirus has stopped many manufacturing and logistics processes in their tracks. Some workers are simply stranded in their homes, factories cannot reopen without a government permit, highways and ports are no longer allowing goods to pass through.

One of Apple’s suppliers, the Pegatron holding, is temporarily shutting down its production in Kunshan and Shanghai, which manufacture the iPhone SE, iPhone 13, and some other key models.

Another shutdown has hit Quanta Computer Inc., responsible for 75% of MacBooks in the world, which will certainly lead to problems with product availability.

The key factor that will determine the actual damage on the company’s supply chain is the length of the lockdowns. In addition, Apple may reroute production to cities that are currently not being quarantine, such as Shenzhen.

The worst-case scenario involves a major lag on 6 to 10 million iPhones – in case production rerouting proves impossible and the lockdowns persist. There are currently no comments available from Apple, but there will clearly be major financial issues if the company’s Shanghai plants do not resume production in the very near future.

The three-week lockdown in the Southern China megapolis shows no signs of a close end, but if the restrictions are lifted within a few weeks, their consequences may be mitigated with minimal losses. Experts predict that any lockdown that’s longer than two months will bring with it a noticeable shortage for end users.

Certain suppliers, such as Unimicron Technology Corp that manufactures printed circuit boards for a number of companies, Apple among them, have claimed the problems are minor as of this time, and that they have managed to move their production to other plants in the provinces with no current lockdowns.

Transportation and logistics, however, are still an issue throughout the country.

Besides Apple, other laptop manufacturers, including Dell and Lenovo, may encounter problems, with about 50% of their products being manufactured in Kunshan.