Apple face shipment delays due to Chinese lockdowns
Deliveries of Apple devices, as well as other products such as Dell and Lenovo laptops are set to face lengthy delays as COVID-19 lockdowns continue in China, according to analysts. Restrictions in the country, where a large share of technology is produced, have forced manufacturers to shut down. As well as this, restrictions have caused backlogs in ports and on roads and workers have been stranded.
Apple Inc supplier Pegatron Corp said it would suspend its plants in Shanghai and Kunshan, where according to supply chain experts, it produces the iPhone 13, the iPhone SE series and other models. It is expected that it may fall behind on between 6 to 10 million orders on iPhone units if the lockdowns continue for two months. Quanta Computer Inc, which produces three-quarters of Apple’s MacBooks globally, also shut operations.
In an attempt to avoid disruptions, the company may consider re-routing production away from Shanghai, which is the major city under lockdown and instead choose cities such as Shenzhen. Eddie Han, a senior analyst at Isaiah Research expects that “volume may be limited due to the logistics issue and the difficulty of equipment adjustment” if suppliers were to be changed to avoid the COVID-19 hotspot of Shanghai.
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Rivian CEO warns of upcoming electric vehicle battery shortage
Chief Executive of the automaker Rivian, RJ Scaringe, is warning that the auto industry could soon be facing a shortage of battery supplies for electric vehicles, surpassing the current computer chip shortage. He has said that “all the world’s cell production combined represents well under 10% of what we will need in 10 years.” His words have left executives worried that the demand for electric vehicle parts matched with a lack of materials could result in a supply crunch.
According to Benchmark Mineral Intelligence, the demand for lithium-ion batteries already surged by 400 gigawatt hours in 2021, up from 59 gigawatt hours in 2015, with an expected increase of 50% this year alone. Raw materials are becoming more expensive for battery makers, and because they account for 80% of the cost of a lithium-ion battery, the competition for manufacturers to get hold of them is increasing.
Mr. Scaringe has announced that Rivian’s strategy for securing battery cells is diversification. As well as this, the company plans to structure deals with partners as co-investments in dedicated capacity and in the future, he wants to develop and build cells internally, saying “we are not going to have a single supplier, we are going to have multiple suppliers.”
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Price of corn at its highest in 9 years
The costs of global commodities continue to surge, with corn trading at $8 per bushel this week which is the highest level recorded since 2012. The contracts were trading near $6 per bushel at the start of the year. Corn is just one agriculture commodity that has increased in price since the war in Ukraine broke out, since the country is a main producer of this, as well as other goods such as wheat and sunflower oil.
Even before the war, agricultural commodities were faced with challenges amid supply chain disruptions and high transportation costs which were contributing to inflation in countries including the United States. The US is experiencing the highest inflation rate recorded since the 1980s, prompting the Federal Reserve to raise interest rates.
The World Bank have already warned that global food insecurity was likely to increase this year because of the price hikes. President Biden is rushing to find solutions to the supply chain problems that the country is facing. Last week, he announced that the administration would temporarily allow the sale of higher-ethanol gasoline over the summer in an attempt to offset rising energy costs.
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