Tech crisis to hit UK amid China lockdown – ‘Won’t be enough to satisfy demand’

China sees more Covid cases in three months than entire 2021

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Two years on from the start of the pandemic, China continues to pursue a zero Covid strategy. The city of Shenzhen in China, with a population of 17.5 million people, is one of the biggest cities that was thrown into lockdown as the country suffers from its worst outbreak of cases yet.

However, experts have warned that this lockdown in China, particularly the one in Shenzhen, could cause a tech crisis as supply chains could be disrupted for months.

Speaking to Express.co.uk, Jason Kaplan, founder and Director of Commodities Analysis and Insight Ltd said: “The reason the Chinese manufacturing behemoths are so effective is that it establishes a hub of manufacturing.”

As an example of the impact of the lockdowns, he cited Apple, saying: “You have Apple, Foxconn is assembling [Iphones] for them, then you have second-tier companies supplying to them.

“The moment you have any disruption in the supply chain, the whole thing sort of stops.”

Mr Kaplan warned that many tech companies are based in Shenzhen, including ones that make printed circuit boards, or PCBs.

He added that if those second-tier companies couldn’t make PCBs due to the lockdown, then “Foxconn can’t make iPhones or MacBooks and the supply chain dries up really quickly.”

He continued: “My understanding is that the Chinese government is going very hard to stop the Covid from getting out of control, so Shenzhen is forced to close production.

“The only way they can keep going is if the workers weren’t interacting with anyone else and establishing bubbles.

“But it’s not very practical, especially when you need things to come from other parts of the supply chain.”

Mr Kaplan warned that once tech companies like Apple run out their stocks of PCBs, they will not be able to make any new products until the second tier suppliers can resume production.

He added: “You still have somewhere the phones that are produced are still being delivered to the UK, after that there’s no more, because nobody can produce anymore.

“It’s not that there won’t be anymore, but there’s won’t be enough to satisfy demand or you have to wait longer than you expected.”

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Aside from Apple, this lockdown could spark a global supply chain crisis as Shenzhen is home to Yantian, the world’s fourth-largest port, which launches 90 percent of China’s electronic shipments.

Last June, authorities shut down the port for four weeks due to a massive Covid outbreak, causing a shipping backlog that took months to ease.

According to Fortune, an executive at the shipping giant Maersk described last year’s lockdown as “a much bigger disruption than the Ever Given getting stuck in the Suez Canal”.

Last week, a Maersk spokesperson told Fortune that the company was still “in the process of figuring out the impact” of Shenzhen’s latest lockdown.

Express has reached out to Apple for a comment.

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