An enforced shutdown of factories in China over the Chinese New Year could throw global supply chains into chaos. That’s the worry for investors after electronics manufacturer Volex (VLX:AIM) issued a statement updating shareholders on the situation in the world’s second largest economy.
‘As a result of the outbreak of coronavirus in Wuhan, all major operations in China have been subject to an extended and mandatory closure over the Chinese New Year holiday period’, the company said in the update.
The update, issued at 9.57am on Monday saw the share price fall nearly 6% to 128p.
Volex makes complex electronic assemblies and advanced power supply products, such as for high-end mobile phone charging. The company runs 14 manufacturing facilities around the world, four of which are in China, albeit, far from the Wuhan coronavirus epicentre.
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Three of its facilities are located in Guangdong, Southern China, roughly 1,000km from Wuhan. Another one is located in Jiang-Su, Eastern China, about 600km from Wuhan.
‘Over the past week we have been working closely with local government agencies in China to implement certain precautionary measures to allow our employees to return to a safe work environment.’
‘As of today, one of our four sites in China has resumed operations at a reduced capacity. The other sites will follow once the necessary approvals are received from the Chinese authorities’ said Volex.
Luceco (LUCE) and XP Power (XPP), which both operate electronics manufacturing centres in China and south-east Asia, have both fallen sharply today despite neither company issuing any announcement.
Luceco is down more than 16% at 119.6p, while XP Power shares had declined by around 5.5% at £32.20.
