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China's Covid outbreak will cause 'some disruption' to tech supply chains, says Marvell CEO

Key Points
  • Covid restrictions in Chinese tech hub Shenzhen will cause "some disruption" to supply chains, Marvell Technology CEO Matt Murphy told CNBC.
  • The city of more than 17 million people is sometimes referred to as China's "Silicon Valley."
  • China is grappling with its worst Covid outbreak since the early days of the pandemic in 2020.
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Marvell CEO expects 'some disruption' to tech supply chains due to latest China lockdowns

The latest round of coronavirus restrictions in major Chinese cities will likely add to supply chain challenges in the technology sector, the CEO of a semiconductor company told CNBC's Jim Cramer on Monday.

In an interview on "Mad Money," Marvell Technology CEO Matt Murphy specifically pointed to Shenzhen, a city of more than 17 million people in Guangdong province that's sometimes referred to as China's "Silicon Valley." Officials in the tech hub directed all businesses that don't provide essential services to halt production or have employees work remotely for a week due to a rise in Covid cases.

"More broadly, if you look at the situation in China, the lockdowns certainly have the potential to have all kinds of disruption in the electronics industry, in particular in Shenzhen, which I've visited many, many times over my career," Murphy said. "It's a city of like 17 or 18 million people, so there will be some disruption."

Foxconn, a supplier to Apple, has paused production at its factories in Shenzhen. It told CNBC in a statement they would remain shuttered until getting government approval to restart operations.

Shenzhen's health orders, which also include city-wide Covid testing and public transportation closures, come as China is experiencing sees its worst coronavirus outbreak since the early days of the pandemic in 2020. Some neighborhoods in Shanghai also have gone into lockdown and schools have shifted to online instruction.

The pandemic has had far-reaching economic effects, particularly on supply chains for key electronics components such as semiconductors. A shortage of those computer chips has hurt a number of industries, including automotive as vehicle makers were forced to limit production.

Murphy noted these challenges, particularly in Southeast Asia, but said "the industry has rallied and certainly Marvell has rallied."

"Even though we're still supply chain constrained, if you look at our organic revenue growth — if you include Inphi plus Marvell together — we're growing the company in the high 30% range," Murphy said. "We're continuing to get more supply, but demand continues to outstrip it. A lot of challenges in the world. ... It's not going away anytime soon."

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VIDEO8:2608:26
Watch Jim Cramer's full interview with Marvell CEO Matt Murphy

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