Lockdowns are Wreaking Havoc on Tech Supply Chains
Electronics manufacturing is particularly exposed to problems caused by the COVID-19 pandemic, largely thanks to a combination of just-in-time manufacturing processes and a far-flung network of suppliers.
Last week, analysts at research firm S&P Global painted a bleak picture, citing a 59.5% decline in US seaborne imports from China during the first three weeks of March 2020, resulting from China's nation-wide lockdown. Meanwhile, subcontracting firms such as Foxconn, are considering moving their operations outside of China where possible. One of Apple's manufacturing partners, Wistron Corp, recently stated that half of its capacity could reside outside China within one year.
Electronics manufacturing is undergoing a significant shift, and while this has been on the horizon for some time, the pandemic is causing it to happen a lot more quickly and chaotically. While firms continue to scramble for components and labour, they are simultaneously hurrying to set up brand new manufacturing plants.
Compounding the problem, there are fresh concerns about the logistics risk in battery supply chains. Industry analysts have studied the quarantine situation for major lithium exporters, from Australia to Chile, and although there are currently no shortages, mines are experiencing extreme difficulty in getting shipments out. “It’s not the orders and it’s not the production, it’s [about] can we get it shipped?" one mining CEO said. "Can we get the vessels? Can we get the containers?” This may result in much less lithium for manufacturers, which will hamper the manufacture of any battery operated goods.
The pressures felt by firms in the battery supply chain during the pandemic are not necessarily limited to their industry. However, they provide insight into how the electric vehicle, battery storage, and consumer tech sectors may need to mitigate growing risks associated with transporting materials across long distances during and after the crisis.
With the pandemic situation evolving daily, it is hard to predict how matters will unfold. However, it is a worrying time for any firm trying to get a shipment of finished products out on time, and it is not difficult to imagine the turmoil behind the scenes.