China’s policy on Covid is particularly radical. The latest evidence comes from Shenzhen after 60 new cases of Covid-19 were reported on Sunday. All businesses, except those supplying food, fuel and other necessities, have been ordered to close or work from home. Chinese authorities are applying a “zero tolerance” strategy and have locked down entire cities to find and isolate every infected person. In Shenzhen, nearly 17.5 million people are being put under lock and key with drastic restrictions on movement. The city authorities have called on the population not to leave unless necessary. The movements are thus controlled in particular by suspending all the local bus services.
Shenzhen is home to some of the most important companies in the field of components and IT. These include the giant Foxconn, which manufactures for Apple and Samsung, as well as a large number of subcontractors that assemble graphics cards or motherboards for brands in the PC ecosystem. Obviously this episode will impact the global production and will have an impact on the supply chains while we had recently seen signs of improvement. The market is also facing the invasion of Ukraine. About half of the world’s supply of neon – needed for lasers used in chipmaking – comes from Ukrainian companies, which have stopped production since the crisis with Russia began. Technology stocks plunged on the Hong Kong stock exchange on Monday as investors worried about the impact of the new outbreak.