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Covid outbreak in China will disrupt tech supply chains, says Marvell CEO

The latest round of coronavirus restrictions in major Chinese cities is likely to exacerbate supply chain problems in the tech sector, CNBC’s Jim Cramer, CEO of the semiconductor company, said on Monday.

In an interview with Mad Money, Marvell Technology CEO Matt Murphy specifically pointed to Shenzhen, the city over 17 million people in Guangdong, sometimes referred to as China’s Silicon Valley. Officials at the tech center have ordered all businesses that are not providing essential services to stop production or force employees to work remotely for a week due to rising Covid cases.

“More broadly, if you look at the situation in China, lockdowns can certainly lead to all kinds of disruption in the electronics industry, in particular in Shenzhen, which I have visited many, many times in my career,” Murphy said. said. “This is a city of 17 or 18 million people, so there will be some disruption.”

Foxconn, a supplier to Apple, has suspended production at its Shenzhen factories. CNBC said in a statement that they will remain closed until government approval is received to reopen.

Shenzhen’s health orders, which also include citywide Covid testing and public transportation shutdowns, come into effect as China sees its worst coronavirus outbreak since the early days of the pandemic in 2020. Some areas in Shanghai have also been closed and schools have switched to online instruction.

The pandemic has had far-reaching economic impacts, especially on the supply chains of key electronics components such as semiconductors. The shortage of these computer chips has hurt a number of industries, including the automotive industry, as vehicle manufacturers have been forced to limit production.

Murphy noted these issues, especially in Southeast Asia, but said “the industry has rallied and, of course, Marvell has rallied.”

“While our supply chain is still limited, if you look at our organic revenue growth — if you include Inphi and Marvell together — we are growing the company in the high 30% range,” Murphy said. “We continue to get more supply, but demand continues to outpace it. There are a lot of problems in the world… It won’t go away anytime soon.”

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