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Apple supplier Foxconn pauses production in Shenzhen because of Covid outbreak

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Foxconn, a major assembler of Apple‘s iPhones, is pausing operations in Shenzhen, a Chinese manufacturing hub, after an uptick in Covid-19 cases led the city to shut down again, the Wall Street Journal reported Monday.

Apple’s stock was down more than 1.5% in premarket trading.

Officials have reportedly said they would revisit restrictions in a week based on case numbers. In the past, similar suspensions have lasted several weeks, causing production issues across several industries, the paper reported.

The shutdown comes just days after Apple announced its latest slate of new products, including a budget iPhone.

Foxconn produces some iPhones, iPads and Macs in Shenzhen. However, almost 50% of iPhones are produced at a factory in Henan province, according to a Bank of America research note from Monday. Apple can start to ramp up production in Henan province to recoup some of those losses.

“Apple/Foxconn have the ability to relocate production to other areas in the short term provided that there is not a significantly higher duration of lockdown,” the firm’s analysts wrote. “An increased period of shutdowns can cause ripple effects at other components that can create a shortfall in production.”

The analysts said they would not cut estimates yet, but remain cautious about any “prolonged supply impacts.”

Read the full report from the Wall Street Journal.

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