Marvell CEO predicts that China's Covid outbreak will cause 'some disruption' to tech supply chains.

• The CEO of Marvell Technology, Matt Murphy, stated on CNBC that the Covid restrictions in Shenzhen will cause "some disruption" to supply chains.
• More than 17 million people reside in the city often referred to as China's "Silicon Valley."
• The country is currently facing its most severe Covid-19 outbreak since the start of the pandemic in 2020.

The CEO of a semiconductor company stated on Monday that the latest round of coronavirus restrictions in major Chinese cities will likely exacerbate supply chain challenges in the technology sector.

During an interview on "Mad Money," CEO Matt Murphy highlighted Shenzhen, a city with over 17 million people in Guangdong province, as China's "Silicon Valley." The city's officials have instructed all businesses except for essential ones to stop production or have employees work remotely for a week due to a surge in Covid cases.

The lockdowns in China could lead to significant disruptions in the electronics industry, particularly in Shenzhen, which Murphy has visited numerous times throughout his career. With a population of approximately 17 to 18 million people, there will undoubtedly be some level of disruption in the city.

Apple's supplier, Foxconn, has halted production at its Shenzhen factories and will remain closed until obtaining permission from the government to resume operations.

In response to China's worst coronavirus outbreak since the early days of the pandemic in 2020, Shenzhen has implemented health orders that include city-wide Covid testing and public transportation closures. Similarly, some neighborhoods in Shanghai have gone into lockdown and schools have shifted to online instruction.

The economic impact of the pandemic has been significant, particularly on the supply chain for essential electronics components such as semiconductors. This shortage has negatively affected several industries, including automotive, as manufacturers were forced to reduce production due to the limited availability of computer chips.

In Southeast Asia, Murphy observed several obstacles, but he stated that the industry has recovered and Marvell has also bounced back.

Despite ongoing supply chain constraints, our organic revenue growth, including Inphi and Marvell, is in the high 30% range. Although we are receiving more supply, demand continues to exceed it. There are numerous challenges in the world that are not going away anytime soon.

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