SHANGHAI—China’s biggest microchip producer, Semiconductor Manufacturing International Corp. (SMIC), and Apple Inc. supplier
Pegatron Corp. continue to operate factories here during the city’s most-recent COVID-19 lockdown by isolating workers and running a closed-off
procedure allowed by local authorities.

These manufacturers are running closed-loop systems where employees are able to keep working as long as they’re confined to the
factory campus and adhere to certain COVID and testing protocols, the people said, asking not to be named discussing internal
procedures. Production capacity, however, may still be affected to some degree due to disruptions to logistics and supply chains.

Closed loops effectively put factory workers in bubbles, insulated from outside infection. This approach proved successful during the
winter Olympics, preventing any COVID spread from the event within the country. 

At SMIC, workers who live close to the factory can continue to work with negative test results. As of this week, the facility is operating normally.
China’s financial center went into a phased lockdown last Monday after authorities failed to contain an omicron outbreak with less invasive measures. Half of the city was locked down and mass-tested for an initial four days, followed by the other half starting on April 1.

The city of Shenzhen underwent a week-long lockdown in mid-March, but, iPhone maker Foxconn Technology Group and other companies were
allowed to reopen plants using closed-loop systems.