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Foxconn factories near Shanghai cease operations over COVID-19 cases

Factories were operating in 'closed loop,' now parts are being made in 'backup' facilities

Foxconn, Taiwan's largest electronics manufacturer, has suspended operations at two factories just west of Shanghai in Kunshan City Country due to onsite COVID cases.

The two factories, Dianfa and Fuhong, make up half of Foxconn's Kunshan manufacturing campuses and were shut on April 20, according to a report from South China Morning Post.

Reuters reported that Kunshan operations of Foxconn Interconnect Technology, which makes data transmission equipment and connectors, will remain closed until the authorities give permission to restart.

Foxconn played down the suspension and said it would have no effect on inventory levels as a whole, particularly in regards to Apple's iPhone.

"As production has previously been deployed to backup factories, the factory's main products are located in overseas shipping warehouse and inventory levels are still sufficient, the impact on the company's business is limited," Foxconn said in a statement.

Factory workers at the Dianfa and Fuhong sites were living and working onsite in what's known as a "closed loop" (essentially a massive bubble, as practised during the Olympics) as Shanghai's 25 million-plus residents approach one month of strict lockdowns while China pursues a "dynamic zero COVID" policy. Foxconn reportedly introduced the "closed-loop management process" in March.

The lockdown is so strict that residents are not allowed to leave their homes, and must rely on vegetable boxes delivered from the government, supplemented by what deliveries can be secured, mostly through large group bulk buys organized on social media apps and disseminated among neighbors.

Residents confined to their home include delivery drivers and manufacturing workers. Truck drivers have also had a difficult time entering and leaving the area.

Manufacturing sites across Shanghai and Kunshan, as well as the Sonjiang District, have suspended operations, leading to warnings from Chinese tech execs and analysts alike of the toll the measures will have on global supply chains.

Some manufacturing sites, including Tesla's Shanghai factory and others on a whitelist created by the Ministry of Industry and Information Technology, have resumed limited production [PDF]. ®

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