On May 12, according to DIGITIMES, industry insiders said that the overall production of laptops in China is mainly concentrated in major coastal cities in eastern China, and it is unlikely to return to the level before the lockdown by July. Insufficient manpower and logistical issues were identified as major challenges.

According to the report, with the easing of the new crown epidemic in Kunshan and Shanghai and the gradual lifting of lockdowns and controls, production companies have resumed work and production one after another. But according to supply chain sources, Kunshan ODMs have only resumed 30-40% of their operations, and Shanghai ODMs have resumed only 10-20%. The slow resumption of operations has resulted in a much lower-than-expected pull-up in parts.

The supply chain is worried that the lack of ODM pulling momentum is not only the result of slow recovery of operations, but also the result of weaker orders from brand customers, which will indicate weak market demand.

In fact, some brand names have pointed to a slowdown in the consumer notebook market. While demand for gaming and business notebooks remains strong, the overall notebook market is still expected to decline as the proportion of these notebooks shipped is smaller than that of consumer notebooks.

Currently, workers in certain communities in Kunshan who have tested negative for the new coronavirus are allowed to return to work at the factory. But in Shanghai, only assembly workers and dormitories are allowed to resume work. In terms of logistics, despite improvements, there are still many challenges to overcome.

Laptop suppliers in Kunshan noted that they had previously recruited workers on a large scale from out of town. Now, hiring across regions is nearly impossible. As a result, they estimate it will take until July to return to pre-lockdown levels of operations.

A metal machine parts company said it was updating its customer order forecasts weekly and had been downgrading them in recent weeks. The current order backlog in July is worse than in May. In the past, May-June was considered a low season, but this year the lowest value will appear in June-July.

The source pointed out that this wave of closures in eastern cities is different from the past. When the epidemic broke out in early 2020, the lockdown was mainly concentrated in Wuhan. After Chinese New Year, there was a brief delay before full recovery took about a month. In contrast, the gradual lifting of lockdowns this year has led to more uneven supply in the ecosystem.

In this regard, Chen Junsheng, chairman and CEO of Acer, said that the recovery of the supply chain did not meet expectations. This is due to supply disruptions caused by the gradual lifting of lockdown restrictions. The previous IC shortage problem has been gradually resolved, but the problem of uneven supply of materials still exists.

Notebook brand suppliers noted that market channel levels had earlier returned to pre-pandemic norms. Many products are still stuck on container ships waiting to enter ports as China's lockdown measures shut down supply chains for a month. Large-scale pulls will not resume until these products are received and sold.