The Chinese government’s new restrictions on energy use have caused several suppliers of Apple, Tesla and other companies to temporarily suspend production in many Chinese factories.
According to reports, at least 15 Chinese listed companies that produce various materials and commodities claimed to have stopped production due to power shortages.
In recent days, power outages and blackouts have slowed down or shut down industries across China, posing new threats to the Chinese economy, and may further block the global supply chain before the critical Christmas shopping season in the West.
Several suppliers of Apple, Tesla and other companies temporarily suspended production in many Chinese factories to comply with stricter energy efficiency requirements and endanger the supply chain of electronic products during the peak season. This move is part of the Chinese government’s new restrictions on the country’s energy use.
As far as Apple is concerned, timing is critical, because the tech giant has just released its latest iPhone 13 series of devices, and as the supply deadline for new iPhone models has been delayed, backorders are increasing. Although not all Apple suppliers are affected, the manufacturing process of parts such as motherboards and speakers has been stopped for several days.
According to analysts, the country’s economic growth is being hampered by production losses caused by power outages. However, according to Reuters, the two major Taiwanese chip makers, the chip manufacturers United Microelectronics and TSMC, said that their factories in China are operating normally.
China is both the world’s largest energy consumer and the world’s largest emitter of carbon dioxide. The Chinese government temporarily shut down electricity in several major manufacturing areas, ostensibly to curb soaring prices for energy operators and minimize emissions.
According to the latest report, Apple supplier Unimicron Technology Corp announced on September 26 that its three subsidiaries in China will stop production from noon on September 26 to midnight on September 30 to comply with the local government’s power restriction policy. Similarly, Apple’s iPhone speaker component supplier and Suzhou manufacturing plant owner Concraft Holdings Co., Ltd. announced that it will suspend production for five days until noon on September 30, while inventory will be used to meet demand.
In a statement, Taiwan’s Hon Hai Precision Industry Co., Ltd. (Foxconn) subsidiary Eson Precision Ind Co Ltd stated that production at its Kunshan plant will be suspended until October 1. According to a Reuters report, the source said that Foxconn’s Kunshan plant had “very little” impact on production.
One of the sources added that Foxconn had to “adjust” a small part of its production capacity there, including the production of non-Apple laptops, but the business did not notice any significant impact on other large manufacturing centers in China. However, another person said that the company had to move the shifts of some Kunshan workers from the end of September to the beginning of October.
Since 2011, China has burned more coal than all other countries combined. According to data from the oil company BP, China accounted for 24% of global energy use in 2018. It is estimated that by 2040, China will still top the list, accounting for 22% of global consumption.
The Chinese government issued a renewable energy development plan in December 2016 as a supplement to its “13th Five-Year Plan” for socio-economic development, covering the 2016-20 period. It pledged to increase the proportion of renewable energy and non-fossil energy use to 20% by 2030.
In 2017, more than 30% of the renewable energy produced in Xinjiang and Gansu provinces in northwestern China was not used. That’s because energy cannot be supplied to where it is needed-the densely populated large cities in eastern China, such as Shanghai and Beijing, are thousands of kilometers apart.
Coal remains the center of China’s booming economy. In 2019, it accounted for 58% of the country’s total energy consumption. China will add 38.4 GW of coal-fired power generation in 2020, which is more than three times the global installed capacity.
Recently, however, Chinese President Xi Jinping stated that China will no longer build new coal-fired power plants overseas. The country has decided to increase its dependence on other energy sources and has vowed to achieve carbon neutrality by 2060.
According to Reuters, insufficient coal supply, stricter emission standards, and strong demand from factories and industries have pushed coal prices to record highs and prompted China to widely restrict its use.
Since at least March 2021, when the authorities of Inner Mongolia Province ordered some heavy industries, including an aluminum smelter, to reduce their use in order to achieve the province’s energy use targets in the first quarter, China’s huge industrial base has been struggling to cope with sporadic electricity prices. Rise and use restrictions.
In May of this year, manufacturers in China’s Guangdong and major exporting countries received similar requirements to reduce consumption due to hot weather and lower than normal levels of hydroelectric power generation, resulting in grid tension.
According to data from the National Development and Reform Commission (NDRC), China’s main planning agency, only 10 of the 30 regions in mainland China have achieved energy-saving targets in the first six months of 2021.
The agency also announced in mid-September that regions that fail to achieve their goals will face more severe penalties, and local officials will be held responsible for limiting absolute energy demand in their regions.
Therefore, local governments in Zhejiang, Jiangsu, Yunnan and Guangdong provinces have urged companies to reduce electricity consumption or production.
Some power providers have notified heavy users to stop output during peak power hours (which may last from 7 am to 11 pm) or completely shut down two to three days a week, while others have been ordered to shut down until further notice or until On a certain date, for example, the soybean processing plant in Tianjin in eastern China will be closed on September 22.
The impact on the industry is extensive, including power-intensive facilities such as aluminum smelting, steel manufacturing, cement production, and fertilizer production.
According to reports, at least 15 Chinese listed companies that produce various materials and commodities claim that power shortages have caused production to stop. However, it is not clear how long the power supply problem will last.
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Post time: Oct-07-2021
