By Ryan Morrison For Dailymail.Com and Afp

Published: 01:03 EDT, 14 March 2022 | Updated: 11:47 EDT, 14 March 2022

Chinese tech manufacturer Foxconn has halted production of Apple products at its factory in Shenzhen, after 17 million people were put in a new covid lockdown.

Restrictions on movement were spread across Shanghai and other major cities to combat an outbreak challenging the nation's zero-tolerance Covid strategy. 

Shenzhen, a major technology hub, imposed its measures on Sunday, to counter an Omicron outbreak in factories and neighbourhoods linked to nearby Hong Kong, which is recording scores of daily deaths due to the virus running rampant.

Foxconn, based in the tech hub, suspended all operations as the restrictions mean all non-essential businesses are no longer allowed to operate. 

This will have an impact on global electronic production, potentially leading to shortages, as 90 percent of the world's electronics are produced in the city.  

Daniel Ives, Senior Equity Analyst at Wedbush Securities, told DailyMail.com: 'This factory is a main source of Apple iPhone assembly and will cause Foxconn to scramble over the next week across its China supply chain to meet growing demand.

'If this lasts more than a week it will take off 1% of iPhone production every week at a time the supply chain is already under hurricane like headwinds.'

Foxconn says it has other backup plants it can move production to, reducing the impact on Apple's supply chain. Apple has not commented on the shutdown. 

Chinese tech manufacturer Foxconn has halted production of Apple products at its factory in Shenzhen, after 17 million people were put in a new covid lockdown 

Foxconn says it has other backup plants it can move production to, reducing the impact on Apple's supply chain. Apple has not commented on the shutdown

Shenzhen is one of ten cities throughout China to have locked down all residents, and health officials have warned tighter restrictions could be on their way.

This is due to mounting concerns over the resilience of China's 'zero-Covid' approach to tackling the pandemic against the highly-transmissible Omicron variant.

Authorities reported 2,300 new virus cases nationwide on Monday and almost 3,400 a day earlier, the highest daily figure in two years.

'There have been many small-scale clusters in urban villages and factories,' Shenzhen city official Huang Qiang said, adding 'this suggests a high risk of community spread, and further precautions are still needed.'

Reports suggest housing compound entrances are being blocked by large plastic barriers, as residents swapped jokes on social media about their rush to grab laptops from offices before the lockdown.

The restrictions still allow staff to work from home where possible, although that won't be much comfort to Apple and other tech giants who rely on production of components and devices in the region - that are then shipped worldwide. 

Ben Wood, Chief Analyst, CCS Insight said the turbulence in the manufacture and supply of mobile phones is currently relentless.

Restrictions on movement were spread across Shanghai and other major cities to combat an outbreak challenging the nation's zero-tolerance Covid strategy 

'Just as we started to see some light at the end of the tunnel on chipset supply shortages the consumer electronics industry now faces a double whammy of the Ukraine conflict and the covid-related shutdown in the Jilin province and Shenzhen.

“The decision by the Chinese government to lock down Jilin province and Shenzhen will undoubtedly disrupt the supply of consumer electronics. 

'Apple supplier Foxconn has already said it is halting operations at its Shenzhen sites and has not provided a clear timeline for when factories will open again.

China's daily Covid cases today rose to their highest level since the Wuhan outbreak began two years ago.

Beijing officials logged 526 infections over the last 24 hours, including 312 that were asymptomatic — did not display any symptoms.

Outbreaks are emerging in dozens of cities including the financial centre Shanghai, the northern port city of Qingdao and the southern city of Dongguan among others. 

No data on Covid deaths and hospitalisations was published. 

China is the last major country sticking to the brutal 'zero Covid' strategy, which sees lockdowns and mass testing imposed when the virus is detected.

It is struggling to keep a lid on the more transmissible Omicron variant, after a study suggested the nation's home-made vaccine offers virtually no protection against the strain.

Suzhou, a city of 6.7million next to Shanghai, is currently under lockdown, alongside Baise, a city of 3.6million near the border with Vietnam. 

Beijing has repeatedly been accused of fudging its Covid data during the pandemic to make outbreaks appear less severe.

In neighbouring Hong Kong, escalating Covid cases are now seeing hospitals and quarantine centres being overwhelmed. Its deaths from the virus are also spiralling, with 233 recorded yesterday compared to 82 just a week ago.  

'However it is not just Apple that will be affected – there are a slew of consumer electronics makers that either have factories in that region or rely on component suppliers who are based there. It’s the last thing they need given the challenges we’ve had over the last 18 months with pandemic-related chip shortages.'

Foxconn said while its plants were closed in Shenzhen, it would deploy backup plants elsewhere in the country to reduce disruption.

It isn't clear how long the main plant will be closed, but sources suggest it should only be for the first half of this week, although it depends on cases.  

One of the people said the government was allowing companies to operate if they could create a 'closed management' system where employees would live and work in a bubble. Such a system was in place during the Beijing Winter Olympics.

Other companies which said they had suspended Shenzhen operations included chip substrate and printed circuit board maker Unimicron Technology Corp, which also supplies Apple and Intel, and flexible printed circuit board maker Sunflex. 

Paul Weedman, who runs manufacturing consultancy Victure in Shenzhen, warned that the restrictions was having a ripple effect beyond Shenzhen to the wider Guangdong province. 

Production for some of his customers' orders have been suspended, and many factory visits cancelled, he said.

'Imagine you have a factory of 100 people and all of a sudden you can't do anything - you can't fulfil your existing orders, you can't accept new orders. The impact is not 2 or 3 weeks, but 3-6 months.'

Tech stocks plummeted on the Hong Kong exchange on Monday, as concerns over the impact of the virus spread in Shenzhen spooked investors.

In Shanghai, residential areas and offices in some neighbourhoods remained sealed Monday as city authorities try to avoid a full lockdown.

Police tape, metal gates and rows of community workers in hazmat suits surrounded shuttered shops and homes in closed-off parts of the city.

The streets of the megacity were quieter this morning, with the lockdown sparked in part due to just 170 new cases.

A restaurateur with four outlets in different parts of Shanghai said he has to wade through a morass of hyper-local restrictions, giving an indication of how ordinary life in China is still spun on its head by a pandemic that the rest of the world has learned to cope with.

'Different districts adopt different policies,' the unnamed businessman said, adding 'I want to close one and keep the rest open, and see how it goes later. What else can I do except tough it out?'

China's daily Covid tally over the last year is shown above. Daily cases have now spiked to their highest level since the initial Wuhan outbreak

Jilin province in the country's northeast recorded over 1,000 new cases for the second day in a row, and authorities banned residents leaving their cities without police permission.

At least five cities in the province have been locked down since the beginning of March, including the major industrial base of Changchun, whose nine million residents were confined at home Friday.

Health official Lei Zhenglong told state broadcaster CCTV that more than 10,000 domestic infections had been recorded in March so far across dozens of provinces, and warned the situation in many areas was 'still developing'.

In comparison, since the start of March there have been over 400,000 new cases of Covid in the US, although numbers are on a downward trend. 

While China's caseload is low in global terms, it is deeply alarming for the country, where authorities have been unrelenting in squashing clusters since early 2020.

At least 26 officials in three provinces have been dismissed due to their handling of local outbreaks, state media reported.

China has so far managed to control sporadic domestic outbreaks through a combination of snap lockdowns, mass testing and travel restrictions, but the latest outbreak is testing the limits of its playbook.

Top medical expert Zhang Wenhong said Monday that China cannot relax its zero-Covid policy just yet despite the low fatality rate of Omicron.

'It is very important for China to continue to adopt the strategy of community Covid-zero in the near future,' Zhang wrote on social media.

'But this does not mean that we will permanently adopt the strategy of lockdown and full testing.'

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