Up to 30% of Apple Watches are made in Shenzhen, which is enduring the sort of hard lock down that only China still favours as a wave of covid infections sweeps through the region.
While the rest of the world is learning to live with covid, China is persisting with its zero tolerance approach.
Authorities locked down the city of 17.5m people, which borders Hong Kong in the south of the country.
Foxconn, a major supplier of Apple smartphones and smartwatches, halted its operations, but said it would attempt to move manufacturing to other plants.
Apple’s share price has dropped by 10% in the past month, but investment bank Morgan Stanley says it expects minimal impact from the Foxconn shut down.
“Overall, we estimate that Apple’s exposure to Shenzhen is [less than] 20% of production,” says analyst Kate Huberty. “Breaking this down by product, our Asia supply chain team estimates Apple has 20% of iPhone, minimal iPad/Mac, 20-30% of Apple Watch, and minimal AirPod production in Shenzhen.”
“While we are confident in Apple assembly partners’ ability to work around these short-term Shenzhen lock downs (as a reminder, there was a partial locked in Shenzhen in Spring 2021 as well), we will have to re-assess the situation if lockdowns persists beyond March 20th and-or spread beyond Shenzhen,” Huberty explains.
Apple is the largest wristwatch manufacturer in the world, generating more in sales than the entire Swiss watch industry combined.
