China Power Shortage: Several Apple, Tesla Suppliers Halt Production
Several suppliers of Apple and Tesla have been forced to suspend production at Chinese factories in recent days to comply with strict energy rationing mandated by local governments in response to a nationwide power crisis, Reuters reported Monday.
“Apple supplier Unimicron Technology Corp late on Sunday said three of its China subsidiaries stopped production from midday on Sept. 26 until midnight on Sept. 30 to ‘comply with the local governments’ electricity limiting policy,” the news agency revealed. Unimicron manufactures printed circuit boards and is headquartered in Taiwan.
Eson Precision Industry Co. Ltd. — an affiliate of Foxconn, another Taiwanese-based Apple supplier — said in a statement it “suspended production from Sunday [September 26] until Friday [October 1] at facilities in the Chinese city of Kunshan” due to power outages. Eson Precision Industry is also a major part supplier for Tesla.
“The company will leverage its inventory to maintain the operation while production is halted,” Eson said in a filing with the Taiwan stock exchange on September 26. “We expect to arrange production on the weekends or in the upcoming holidays [next month] to meet customers’ needs.”
— Reuters (@Reuters) September 27, 2021
“Concraft Holding Co Ltd, a supplier of speaker components for Apple’s iPhone and which owns manufacturing plants in Suzhou city, said it would suspend production for five days until noon on Thursday [September 30] and use inventory to meet demand,” Reuters relayed.
Suzhou is a major city in southeastern China’s Jiangsu province. It is located 60 miles west of Shanghai, which is the most populous city proper in the world and a global center for manufacturing, technology, and finance. Kunshan, the site of Apple supplier Eson Precision Industry, is a county-level city of Jiangsu province that is bordered by Shanghai to its east and Suzhou to its west. Kunshan is administered by Suzhou.
A person familiar with the power outages in Jiangsu province told Reuters on September 27 the managers of “facilities in Kunshan of contract manufacturer Foxconn” have had to “move some of the Kunshan workers’ shifts in late September to early October” to accommodate this week’s halt in production.
The production suspensions of Apple, an American multinational technology company, and Tesla, a U.S.-based electric vehicle and clean energy company, threaten the continuity of global supply chains “during a peak season for electronics goods including the latest iPhones,” Japan’s Nikkei Asianoted on Monday, referring to the upcoming winter holiday season.
“In the past month, 16 out of 31 provincial jurisdictions [in China] – from industrial powerhouses in the south such as Guangdong to the rust belt in the northeast – have rolled out electricity-rationing measures, triggering widespread alarm among much of the population and plunging the nation’s industrial sector into chaos,” the South China Morning Post reported on September 27.
“China’s crackdown on energy consumption comes from a combination of reasons — surging coal and natural gas prices, as well as Beijing’s effort to cut emissions and an increase in energy demand — and is impacting a wide range of industries,” Nikkei Asia observed on Monday. “It comes at a time when global markets have been shaken by the debt crisis engulfing China Evergrande Group, one of the country’s leading property developers.”