Samsung Electronics faces laptop shipment delays after China's Covid lockdowns China lockdowns trigger supply chain disruption
Translated by Kim So-in 공개 2022-04-21 08:10:51
이 기사는 2022년 04월 21일 08:07 thebell 에 표출된 기사입니다.
South Korea’s electronics companies including Samsung Electronics have taken a hit from China’s zero-Covid policy.Samsung Electronics recently sent a letter to some of its clients notifying them of the possibility of shipment delays, according to industry sources on Tuesday. Its Suzhou laptop plant is in operations, but it is expected to face shipment delays due to supply chain disruptions.
Earlier this month, Chinese authorities have extended their lockdown of Shanghai to cover all its 25 million people after a fresh surge in Covid cases. Suzhou and Xi’an are also keeping their residents indoors, alongside Kunshan and Shenzhen.
There is no setback in Samsung Electronics’ own production line. There is a possibility of adjusting production in the future, but the company has already established an internal plan to better cope with the shutdown. It also stockpiled inventory to prepare for emergencies at each stage of the supply chain.
The problem is with Samsung Electronics’ suppliers. The delay in the laptop production at the Suzhou plant was also caused as part suppliers halted operations because of the lockdown. MacBook manufacturer Quanta Computer also halted production in Shanghai, putting supplies of Apple’s top-tier laptops at risk
Korea Electronics Association started a process to look into the situation at seven major Korean companies that operate in China to understand how they respond to small and medium-sized business partners that are relatively weak in supply chain management.
Shanghai is the country's leading industrial and manufacturing center, near Suzhou, Hangzhou and Nanjing. China's strict Covid measures have also stopped truckers from unloading containers at the port of Shanghai, the largest container port in the world.
LG Electronics seems to be less affected by China’s Covid lockdowns. It already experienced semiconductor shortage over the past two years due to the pandemic and is now capable of systematically and stably responding to external risks through efforts like supply chain diversification.
Impact on LG Electronics’ parts suppliers is also limited. LG Display and LG Innotek, LG Electronics’ major suppliers, are operating in China in the form of sales entities instead of production plants, which limits impact from the lockdowns.
A rise in the cost of raw materials, however, is weighing on the companies. Market research firm Omina forecast LCD panel prices, which have declined since last August, to increase by more than 10% until June. China accounts for more than half of LCD production and major TV set makers such as Samsung Electronics and LG Electronics purchase a high proportion of the production. (Reporting by Hyun-ji Sohn)
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