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China’s lockdown moves may hit phone market

Paul Lipscombe
May 3, 2022

China has enforced strict lockdowns in a bid to completely quash Covid outbreaks in the last couple of months

The latest lockdown situation in China is expected to bring uncertainty to the smartphone market, say industry analysts.

This comes as China has recently enforced lockdown measures in parts of the country in response to recent COVID-19 outbreaks.

As part of its ‘zero-COVID’ measures, lockdowns led to factories being closed by Apple supplier Foxconn at two manufacturing sites in Kunshan near Shanghai. Operations in Shenzhen had earlier been disrupted in March.

The lockdowns led to the FTSE 100 dipping two per cent – wiping £40 billion off the index.

And manufacturers will feel the impact of these closures most, says CCS Insight technology analyst and market forecaster James Manning-Smith.

“Manufacturers are likely to be worst hit by ongoing supply issues, due to elevated component costs and a more restrictive environment,” he said.

“These vendors have a difficult choice on their hands – whether to decrease prices to stimulate consumer demand, or to protect margins as manufacturing and distributing costs increase.”

Severe but brief

Meanwhile analyst firm Counterpoint Research anticipates that the lockdowns will have a big impact but not in the long term.

“The impact of the current round of lockdowns on manufacturing and logistics in China is likely to be severe but relatively brief and limited to only those areas like Shanghai, where controls are most stringent.” said a spokesperson for the firm.

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