COVID controls in China prompt Apple supplier Pegatron to ’emphasize’ expansion elsewhere

The logo of Pegatron, which assembles the electronics for Apple Inc iPhones, is seen during an annual general meeting in Taipei, Taiwan June 20, 2017. REUTERS/Tyrone Siu

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TAIPEI, June 15 (Reuters) – Recent lockdowns imposed by China to control the spread of COVID-19 prompted Apple Inc’s (AAPL.O) iPhone maker Pegatron Corp (4938.TW) to “put focus” on expanding into other countries, a senior executive at the Taiwanese firm said on Wednesday.

In April, Taiwan-headquartered Pegatron suspended operations at its Shanghai and Kunshan factories in China due to strict COVID-19 protocols, affecting production and deliveries. China has since lifted those restrictions.

However, the company is still facing labor shortages, exacerbated by COVID restrictions in China, leading the company to “highlight” its expansion plans elsewhere, said Chairman Liao Syh- jang at an annual shareholder meeting in Taipei.

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“We faced COVID controls for two months. We could not have assessed this in advance, which makes me highlight our expansions in Vietnam, India, Indonesia and North America, to solve our labor shortages, the gap between high and low seasons, and to increase the utilization of our production capacity.”

In recent years, Pegatron has sought to expand its presence in Southeast Asia and North America.

Chairman TH Tung added that their customers had “different reasons” for setting up factories in Vietnam, India and Mexico.

“But a common factor is the ability to reduce concentration in Shanghai, Suzhou, Chongqing,” Tung said, adding that recruiting staff in China has become increasingly difficult over the past seven to eight years.

Tung said that with the COVID pandemic easing around the world, China emerging from its lockdowns to control the coronavirus, and the electronics industry’s peak season coming later in the year, the rest of 2022 should be much better for the business.

“Combining these factors, I expect the second half of the year to be better, or much better, than the second quarter.”

Taiwan-based Foxconn (2317.TW), the world’s largest contract electronics maker that also assembles iPhones, last month predicted more stable supply in the second half of 2022.

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Reporting by Sarah Wu; Editing by Robert Birsel

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