It is less in the headlines, but China is going through a strong rebound of COVID. The figures are very bad and according to the local authorities, they are even twice as high as when the pandemic started more than 2 years ago. A situation so worrying that the authorities have set in motion a wave of heavy constraints for the inhabitants of some territories. We have all seen images of Shanghai transformed into a ghost town. Indeed, the authorities have decided to carry out a radical closure of the city, without giving any prospect of exit to the 26 million inhabitants blocked in their homes. But the return of the Covid could also put the heat back on our supplies, especially those of laptops.
Not far from Shanghai (50 km) is the city of Kunshan, a nerve center for the PC industry for several reasons. First of all, the free trade zone is ideally located on the Shanghai-Nanking axis, which allows it to be as close as possible to the labor force and logistical hubs. This is probably the reason why the main PC/laptop assemblers and panel manufacturers have set up their largest production units here. Foxconn, AUO, Quanta, Pegatron, Wistron, Compal and others concentrate the vast majority of their production here for brands like Apple, Asus, MSI, HP and others. And of course, the Covid wave has also arrived in Kunshan, forcing the local authorities to order the closure of the electronics industry in the entire area. The repercussions will be multiple, penalizing the production of iPhone, OIT modules, PCBs and PC screens. But it seems that one sector will be hit much harder than the others; it is the laptop sector.
Towards a shortage of laptops?
Names like Pegatron, Wistron or Compal don’t talk much here in Europe, but these companies produce the laptops of the main brands present on our market. Others have their own units here, such as MSI. The closure of the factories, even if it is limited in time, will have repercussions in terms of deadlines, prices and availability on the entire world market.
Even more alarming, Commercial Times anticipates a global shortage of notebook PCs that could affect shipments until the last months of 2022. In addition to laptops, Kunshan is also home to AUO, one of the world’s largest display manufacturers. AUO designs and sells LCD panels for laptop screens as well as monitors. The Commercial Times ranks the impact of Kunshan’s COVID measures as potentially “greater than that of the Shanghai closure.” However, the effects of the lockdown will have to be reassessed according to the duration imposed by the authorities. For the time being, this should not go beyond the first week of April… Until a few hours ago, the warning of the Commercial Times could seem a bit extreme. Indeed, the companies concerned have factories in several places on the territory to limit the damage. But unfortunately, the situation seems to spread quickly to several other areas of the country, amplifying the domino effect.
