Suzhou, Zhejiang, Guangdong, and Northeast China have been experiencing successive power shortages as the country doubles down on the “Dual Control” policy, where Suzhou had announced a suspension in operation between the 26th and 30th of September, with a resumption on October 1st. Apple suppliers warn that the power restriction will obstruct the supply chain since Apple is currently preparing for the peak season, including the production of the latest iPhone 13.
As reported by the Nikkei, executives of Apple suppliers commented that various levels of companies in Jiangsu had received news regarding a comprehensive suspension of power usage at the end of September, or a reduction of 10-30% in power consumption in the remaining duration in accordance with the target laid down by the government.
The power restriction policy has impacted critical suppliers such as Apple, Tesla, Microsoft, HP, and Dell, as well as interrupted with the packaging, testing, and production of chips for Qualcomm, NVIDIA, and Intel.
Wafer foundries, as well as companies of component manufacturing and assembling, warn that a continuous suspension of energy next month will result in a chain reaction for the entire supply chain, since the period between September and November is the traditional peak season for electronics in order to respond to the purchase willingness during the holiday season, and missing the production period will not only introduce risks to the continuity of the supply chain, but also severely affect the sales of electronics.
Executives of iPhone suppliers commented that companies are currently investigating their inventory of components. Although it is still manageable right now, an exhaustion of inventory next month, coupled with the power restriction policy, will lead to considerable damages.
In addition, the interruption of production may further exacerbate the shortages in the auto and electronics industries that are already constrained.
Pegatron, who primarily handles the assemblage of the iPhone, has set up extensive production bases in Kunshan and Suzhou, and started to reduce non-necessary power consumption since September 26th, which lowers the overall power consumption by at least 10%. Other tech suppliers in Jiangsu are coordinating with the government pertaining to a reduction of 10-30% in power consumption in order to allow a continuous operation of machines.
As pointed out by the Nikkei, manufacturers are implementing new measures from idling production lines to lowering non-necessary consumption of energy in accordance with the power restriction policy, and are fulfilling orders using the existing inventory. Furthermore, some companies have arranged additional working hours amidst the Golden Week holiday during October in order to make up for the capacity losses from September.
(Cover photo source: Flickr/Sharon Hahn Darlin CC BY 2.0)
