Sarah Wu, Josh Horwitz

SHANGHAI/TAIPEI – Shipments of certain Apple products and Dell and Lenovo laptops may be delayed if China’s COVID-19 lockdowns remain in place, analysts stated. This is because curbs force assemblers into shutting down, and closed-loop arrangements become harder to manage.

China’s efforts to stop COVID-19 spreading has caused major disruptions in global supply chains.

Pegatron Corporation, Apple Inc (NASDAQ:), supplier, announced this week that it would close its factories in Shanghai and Kunshan. These plants, according to supply chain specialists, produce the iPhone 13 as well the iPhone SE Series and other legacy models.

Analysts said that Quanta Computer Inc., which makes about three quarters of Apple’s Macbooks worldwide, has also been shut down. This could have a greater impact on the delivery schedule.

Apple’s final impact on the supply chain will be uncertain. This is due to factors such as how long locks remain.

Analysts said that the company might also look at rerouting production from Shanghai and Kunshan into factories in other locations, like Shenzhen.

Apple may transfer orders from Pegatron or Foxconn to Apple, however, we believe the volumes will be small due to logistic issues and difficulties of adjustment. Eddie Han, a Taipei-based senior analyst at Isaiah Research, said, “Apple may contemplate transferring the orders to Foxconn to Pegatron, but it is possible to do so, but this would not make sense.” Foxconn is an acronym for Hon Hai Precision Industry Co Ltd.

Han stated that Pegatron could fall behind 6 to 10 millions iPhone units in the worst case scenario if lockdowns continue for more than two months or Apple is unable to reroute orders.

Apple has not responded to our request for comment.

Xpeng Inc (NYSE:) Inc’s Chief Executive Officer and Huawei Technologies Co Ltd Ltd have highlighted the economic risks if Shanghai’s factories cannot resume production.

Shanghai has entered its third week under lockdown, and there is no indication of an imminent wide-scale reopening.

Trendforce’s research manager, Forrest Chen told Reuters that even if the lockdowns are lifted in a few more weeks there is still a possibility of recovery.

But, “if the lockdown is for more than 2 months, it’s already impossible to get back on your feet.” He said that at this point there will be an end-user shortage after the lockdown ends.

Some suppliers could be willing to route production.

Unimicron Technology Corp., which produces printed circuit boards for Apple companies, said that the Kunshan lockdown has had minimal impact and it could rely on other Hubei and Taiwan plants to sustain production.

However, logistics and transportation remain an issue that is universally addressed by cities in China.

Kunshan factory owner told Reuters the district government had issued protocol to reopen but not given a date.

Compal Electronics Inc., a Taiwan-based business that manufactures PCs in its Kunshan plants for Dell Technologies (NYSE:) Inc. as well as Lenovo Group (OTC:) Ltd, may be among the laptop makers affected. Chen estimated that around 50% of Compal’s laptop production was located in Kunshan.

Compal said Friday to Reuters that Kunshan had not been halted by it. Emails seeking comments from Dell and Lenovo were not returned by the companies.