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China COVID controls makes Apple supplier Pegatron "emphasise" expansion elsewhere

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·2 min read
FILE PHOTO: The logo of Pegatron, which assembles electronics from Apple Inc’s iPhones, is seen during an annual general meeting in Taipei
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By Sarah Wu

TAIPEI (Reuters) - China's recent lockdowns to control the spread of COVID-19 have made Apple Inc iPhone assembler Pegatron Corp "emphasise" its expansion in other countries, a senior executive at the Taiwanese firm said on Wednesday.

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

However, the company is still facing labour shortages, exacerbated by COVID restrictions in China, leading the company to "emphasise" its expansion plans elsewhere, President Liao Syh-jang told an annual shareholder meeting in Taipei.

"We faced COVID controls for two months. We couldn't have assessed that in advance, so that makes me emphasise our expansions in Vietnam, India, Indonesia, and North America, to solve our labour shortage, the gap between peak and low seasons, and to increase the utilisation of our production capacity."

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

Chairman T.H. Tung added that their customers had "different reasons" for setting up factories in Vietnam, India and Mexico.

"But one shared 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 globally, China coming out of 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 company.

"Combining these factors, I expect the second half of the year to be better, or a lot better, than quarter two." Taiwanese firm Foxconn, the world's largest contract electronics maker which also assembles iPhones, last month predicted more stable supply in the second half of 2022.

(Reporting by Sarah Wu; Editing by Robert Birsel)