Yahoo Finance Why China’s lockdowns will have devastating impact on Australia
From Apple products to cars, the lockdowns in China will cause supply chain woes for months to come.
Shenzhen and Shanghai have been plunged into lockdown, halting the production of circuit board makers.
Foxconn, which supplies Apple with the computer chips needed for their products, was forced to halt production.
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Unimicron, which is Taiwan’s biggest circuit board maker and supplies Apple, Intel and Nvidia, also said it was suspending its operations.
“More cities may follow the practice of Shenzhen,” Raymond Yeung, chief economist for Greater China at ANZ, said in a note.
“If the lockdown is extended, China’s economic growth will be significantly affected.”
Global chip shortage
Computer chips are in almost everything nowadays and the manufacturing of these chips is primarily done in China.
Chip manufacturing was one of the hardest-hit industries at the start of the pandemic in 2020, with used car prices soaring.
This was because the production of new vehicles was halted as a result of the chip shortage.
The effects of this are still being felt with used car prices still elevated.
Prior to this most recent lockdown in China, Intel said it was in the worst of its chip crisis in October 2021 and it likely wouldn't be fixed until 2023.
“We’re in the worst of it now,” Intel CEO Pat Gelsinger said.
“Every quarter next year, we’ll get incrementally better, but they’re not going to have supply-demand balance until 2023.”
The global chip shortage has also been exacerbated by the invasion of Ukraine by Russia, with concerns it will be another factor pushing prices higher for consumers.
“It will continue to constrain the chip source going into the automotive industry”, Techcet president Lita Shon-Roy said.
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