Chinese chipmaker workers told to sleep at their factories

'Closed loop' ordered to keep fabs and manufacturing plants running amid COVID-19 outbreaks

Employees at Shenzhen facilities owned by Chinese chipmaking giant SMIC and other manufacturers will have to sleep at work this week due to the local government reportedly ordering the companies to enter a "closed-loop" operating mode.

Citing industry sources, the South China Morning Post reported Monday the Shenzhen government issued the order to fabs and factories on Sunday due to a fresh wave of infections caused by the COVID-19 Omicron variant.

Beyond SMIC, other manufacturers impacted by the order include Chinese telecom giant Huawei, drone maker DJ, telecom kit maker ZTE, Apple supplier Foxconn, and several more.

Only Foxconn responded to the Hong Kong-based newspaper's report, saying its facilities continue to operate normally as the company follows local orders to ensure "safe production."

The order, which will end after seven days, is intended to limit the movement of employees. This means workers will have to sleep and eat at their place of employment this week.  

The closed loop is the main strategy used by governments in China to stave off COVID-19 outbreaks while keeping factories open. However, it's only allowed for facilities that have on-site housing for employees. Employees are tested for COVID-19 daily, and entry by visitors is limited.

The COVID-19 outbreak that prompted the most recent closed loop in the major Chinese manufacturing hub is relatively small to other metropolitan areas. Shenzhen, home to 17.5 million people, had reported 21 new COVID-19 cases on Sunday, a small increase from 19 the day before. By contrast, New York City, where 8.4 million people live, reported 5,054 cases on Friday, down from 5,321 a day earlier.

The controls in China, part of the country's "zero COVID" strategy, are stricter than many other parts of the world, including the West, where governments have transitioned to a more laissez-faire approach to the ongoing pandemic. However, the restrictions have taken a toll on residents, and lockdowns have slowed China's economy, causing its gross domestic product to decline by 2.6 percent in the last quarter.

Earlier this year, more than 60 percent of SMIC's staff in Shanghai had to live on the company's campus, or at least in the vicinity, for a period due to a closed-loop order in China's largest city. ®