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Shenzhen locks down 17.5 million residents, closing factories risking chaos in global supply chain

China’s southern tech hub ordered the city of 17.5 million into lockdown to combat an outbreak of COVID-19. Foxconn, Apple's top iPhone manufacturer, said it is waiting on the advice of the local government to determine when the factories will reopen.

Shenzhen’s government ordered the citywide lockdown on Sunday after reporting 66 new COVID cases that day, bringing the southern Chinese city's total to over 400 since late February. The lockdown is scheduled to last a week, during which time health authorities say they will test every resident three times.

Foxconn told Fortune it has “adjusted [our] production line to minimize the potential impact” of the lockdown in Shenzhen, tapping into the company’s “diversified production sites in China.”

Besides rerouting Apple's supply chain, the week-long lockdown in Shenzhen could cause major disruption to international supply lines of other tech giants. Shenzhen is home to some of the world’s largest ports and is a major terminus in trade between the U.S. and China.

When authorities halted operations at Shenzhen’s Yantian port to tackle a COVID outbreak last June, it caused a shipping backlog that took months to ease. Yantian is the world’s fourth largest port and processes roughly 90% of China’s electronics shipments.

One executive at shipping giant Maersk described last year’s four-week port closure as “a much bigger disruption than the Ever Given getting stuck in the Suez Canal.” On Monday, a Maersk spokesperson told Fortune the company was still “in the process of figuring out the impact” of Shenzhen’s latest lockdown.

According to Bloomberg, Yantian port said Monday that it is operating normally.

Shenzhen is the largest Chinese city to implement a full-scale lockdown since Wuhan and its neighbors did so during the first COVID outbreak in early 2020, sealing roughly 40 million people indoors. Since then, other major cities—like Shanghai, which is currently combating its own COVID outbreak—have implemented localized lockdowns to contain COVID by cordoning off individual neighborhoods and residential compounds.

But Shenzhen, home to tech giants including Tencent and Huawei Technologies, is potentially at greater risk of a massive COVID outbreak than other Chinese cities. The southern tech hub shares a border with Hong Kong, which is currently suffering its worst COVID outbreak since the pandemic began, logging over 30,000 cases per day.

Shenzhen has traced the majority of its new COVID cases to Hong Kong since February.

“If prevention and control is not strengthened in a timely and decisive manner, it could easily become large-scale community transmission,” Shenzhen health official Lin Hancheng told a media briefing Sunday.

Credit Fortune by EAMON BARRETT

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