Serious supply chain issues could be ahead for major technology companies.
Hon Hai Precision Industry Co. Ltd., better known as Foxconn, today was forced to halt almost all production in its mainland Chinese factories until Feb. 10, a ban that, if extended, will disrupt supplies for dozens of companies.
Foxconn is the world’s largest provider of manufacturing services, manufacturing products for Apple Inc., Amazon.com Inc., Cisco Systems Inc., Dell Inc., Google LLC, Hewlett Packard Enterprise Inc., Huawei Electronics Co. Ltd., Intel Corp., Nintendo Co. Ltd., Sony Corp., Xiaomi Inc. and others.
While best known for manufacturing iPhones and iPads such as in the iPad factory in Chengdu (pictured), the company also makes the Sony PlayStation, Amazon Kindle, Xbox One, various phone models and processor sockets and motherboards used in enterprise hardware.
The Foxconn plants have not been in production since the beginning of the Chinese New Year, which started Jan. 25. The plants traditionally shut down for a week during the New Year celebrations, but the Chinese government has extended the holiday break in an attempt to curtail the spread of the virus.
Given that attempts so far to stop the spread of the Wuhan coronavirus appear to be failing, with at least 24,290 cases in mainland China as of 10 p.m. EST, the real fear is that the holiday will continue to be extended beyond Feb. 10.
“What we are worried about is delays for another week or even another month. The impact would be big,” a source told Reuters. “It definitely will have an impact on the Apple production line.”
Foxconn, itself a Taiwanese company, does have plants outside mainland China and is said to be attempting to shift manufacturing to those, but the majority of its factories are in the Middle Kingdom.
Supply chain issues aside, the spread of the virus is starting to affect retail operations at other companies. Apple shut all its retail outlets in China over the weekend, and Samsung Electronics Co. Ltd is also reported to have started closing stores on a case-by-case basis. LG Electronics Co. Ltd. has also suspended manufacturing at its battery and display plant in Nanjing until Feb. 9.
Outside China, there’s also some concern as to whether the Mobile World Congress 2020 in Barcelona scheduled for Feb. 24 will go ahead after both LG and ZTE Corp. canceled their attendance over coronavirus concerns.
In a statement, the GSM Association, the organizer of the conference, said that it continues to monitor and assess the potential impact of the coronavirus, adding that there is minimal impact on the event so far.
Photo: Duncan Riley
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