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Due to COVID restrictions, Pegatron has Halted Manufacturing at its Shanghai and Kunshan Factories.

Both Pegatron and Apple may suffer major consequences as a result of the shutdown.

As the metropolis of 25 million people remains under a rigorous Covid lockdown, one of Apple’s biggest suppliers has halted production at its factories in and around Shanghai.

Pegatron said on Tuesday that manufacturing at its factory in Beijing, as well as the neighboring city of Kunshan, had been halted until further notice. The firm said in a statement that “the date of factory reopening will be advised by the local government,” and that it will cooperate with officials to resume operations “as soon as possible.”

It was unclear which types of production would be affected right away. According to reports from multiple outlets, including Bloomberg, Pegatron, a Taiwanese company known for making iPhones and other electronics, had previously been allowed to continue operating in Shanghai under a closed loop system that would keep essential workers in the factory and other personnel out. According to Nikkei Asia, Pegatron, a Taiwanese company that is one of a few that assembles the iPhone, has paused production at two sites in Shanghai and one in Kunshan in order to comply with the Chinese government’s COVID-19 restrictions. In response to a recent rise of COVID-19 in the country, China has implemented tough measures.

Both Pegatron and Apple may suffer major consequences as a result of the shutdown. According to Nikkei Asia, those Pegatron plants are the company’s only iPhone manufacturing hubs, with Pegatron producing “approximately” 20 to 30 % of all iPhones. Pegatron “hopes to resume production shortly,” according to the report, but it’s unclear when that would be.

A request for comment from Apple was not immediately returned. According to Nikkei Asia, Quanta, a company that assists in the production of MacBooks, has also paused production at a Shanghai facility.

During the epidemic, supply chain concerns have been a persistent challenge, affecting businesses in a variety of industries. In reaction to China’s regulations, Tesla had to close its Shanghai manufacturing, for example. Furthermore, the global chip scarcity has made purchasing a variety of consumer goods more challenging.

Nio (NIO), an electric car manufacturer, announced on Saturday that it, too, had temporarily paused production, citing how its suppliers across China had “suspended production one after the other” in recent weeks owing to pandemic-related problems.

Even before Pegatron’s revelation, Apple (AAPL) was experiencing supply chain issues of its own. Foxconn, the company’s other major Taiwanese manufacturer, halted operations in Shenzhen last month due to a lockdown in the city north of Hong Kong.

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