Executives at MediaTek Inc., which supplies mobile chips to Samsung and Xiaomi Corp., told investors Wednesday it was trimming its outlook for global smartphone shipments from single-digit percentage growth to flat, at about 1.35 billion units. Others saw the lockdowns depressing consumer spending. “There are many customers that are just shut down - they’re not taking deliveries,” Chief Financial Officer Rafael Lizardi said in an interview. That may suggest the problems are more about logistics than a broader drop in demand for electronics. While Texas Instruments cut its revenue outlook, the company said it isn’t seeing widespread order cancellations. Continental AG, Europe’s second-largest maker of car parts, lowered its growth forecast for global production of passenger cars and light commercial vehicles to a range of 4% to 6%, from 6% to 9% previously.
lost about a month of work during the Shanghai shutdown. “The impact will continue to show in the second and third quarter,” said Yang, whose customers include Samsung and General Motors Co.Īutomakers have been hit too. James Yang, president of Taiwan’s Innolux Corp., explained that consequences of China’s lockdowns will be far-reaching. AU Optronics said it is difficult to give guidance for the second quarter because of the unpredictable situation. The company has lost 30% to 40% of its capacity at its business in Kunshan, while other Chinese units are under different levels of restrictions, Peng said. We have to monitor what materials we are short of on a daily basis.” “Today it would be chemical materials, tomorrow it would be something else. “The materials we lack can change every day,” said Paul Peng, the company’s chief executive. and HP Inc., explained Tuesday that lockdowns in China have increased the complexity of everything from production to recruitment. to lower-profile companies that play a critical role in global supply chains.ĪU Optronics Corp., a Taiwanese company whose customers include Samsung Electronics Co. They range from giants like General Electric Co. Scores of companies have addressed the impact of China’s policies on earnings or have been asked about it in the past week, according to a Bloomberg review of conference call transcripts.
Still, key industrial parks remain inaccessible for trucks. The uncertainty, coupled with inflationary pressures, is expected to hammer consumer demand for high-cost discretionary items like the smartphones, electric vehicles and laptops.Ĭhina’s industry regulator has vowed to keep the country’s supply chain “unimpeded” following Xi’s order to mitigate the pandemic’s impact on the economy. 2 economy, putting Beijing’s 5.5% growth target increasingly in question. More broadly, China’s policies for stamping out Covid are rippling the world’s No. Xi Jinping’s administration has embraced a strict Zero Covid policy to show the Communist Party’s power in stopping the pandemic’s spread. Lockdowns in Shanghai, a city of 25 million, have exacerbated the troubles, and now may spread to Beijing. Factories closed, while shipping costs surged. Chief Executive Officer Tim Cook helped pioneer the China-centric model, building the world’s most valuable company by centralizing assembly in the country as components were shipped in from around the globe.īut the Covid pandemic exposed risks from the strategy never before contemplated. “Depending on how they unfold in the future, there will be some questions that still remain with regard to the uncertainties over demand in the second half.”įor decades, companies shifted production into China because of the benefits of low-cost labor, a massive domestic market and supportive government policies. “The biggest demand factor would be the lockdowns,” said Myoungsoo Park, a Hynix marketing executive, referring to orders from companies with supply chains in China. Hynix owns facilities in Wuxi and Chongqing, and supplies companies such as Apple Inc., whose largest iPhone manufacturing facility is in Zhengzhou. warned Wednesday that any recovery in the smartphone and computer markets hinges on China’s policy approach to Covid-19. South Korean memory chipmaker SK Hynix Inc.
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