China Covid Lockdowns Cast Shadows on Apple

What a year this is turning out to be. If war and inflation wasn’t enough, we’ve still got Covid-19 doing its thing. Whoever sent the memo that the pandemic is waning apparently left China off the distribution list. Yet another Covid-inspired lockdown in China has closed Foxconn factories in Shenzhen until at least March 20. That’s bad news for Apple, as Foxconn is its primary manufacturer.

According to a Morgan Stanley report today, the immediate impact of the lockdown on Apple should be limited, as it estimates that Shenzhen accounts for production of only 20% of iPhones and a “minimal” number of iPads and Macs. But there’s a decent chance the China lockdowns will last much longer than a week. Former FDA Commissioner Scott Gottlieb was quoted by CNBC today saying that China’s population is vulnerable to a new, even more contagious variant of Omicron, partly because the quarantine policy used there has prevented natural immunity from developing. Assuming the factory shutdowns go past next Sunday, the impact on Apple will grow.