A major COVID lockdown in China’s technology hub could cause knots in the supply chain for U.S. companies like Apple and fuel higher inflation. Residents of Shenzhen, just north of Hong Kong, have been told to lock down for at least a week over a COVID outbreak there. The city has reported more than 400 cases since late February in a country with a zero-COVID policy.
Along with being home to more than 17 million residents, Shenzhen is considered the Silicon Valley of China, hosting headquarters of major Chinese tech companies like Huawei and Tencent and home to a vital manufacturing facility for Foxconn, the main Chinese maker of the iPhone and other Apple products.
Foxconn confirmed operations across its Shenzhen sites are shut down, with only essential services allowed to remain open during the lockdown. All nonessential workers have been sent home and public transportation has halted. Over the next several days, the government says all adults will need to submit to three rounds of PCR testing.
It’s not just company exposure to the region, like Apple’s, that will impact the global supply chain. Shenzhen also has one of the world’s largest ports. An outbreak there a year ago caused global shipping rates to surge, raising prices on many goods.
At the same time, China has imposed lockdowns in Shanghai and the Jilin province. Jilin is the first provincial lockdown since the Hubei province sealed off following the Wuhan outbreak two years ago. In Shanghai, the government ordered school closures amid an outbreak there.
On Sunday, China reported nearly 3,400 daily COVID-19 cases across the country, double the previous day. The worst outbreak in two years, China’s zero-COVID policy is being tested by the highly-infectious omicron variant that has already burned through countries like the U.S.