[ad_1]
TAIPEI – Widespread power outages in China reignite pressure from tech makers to shift output from Asia’s largest economy, with suppliers to Apple, Amazon and others scrambling to keep production on the good way ahead of the busy holiday season.
At a mid-size electronics accessory manufacturer in Zhongshan, Guangdong Province, power outages have become the new normal.
“There have been sporadic blackout notices since June, but it has become a regular thing since mid-September,” an official told Nikkei Asia. “Now we get a notice every week telling us the days of the following week they’ll cut the power. “
The company’s 500 employees manufacture Bluetooth receivers, headphones, and other consumer electronics accessories for global brands like Harman Kardon and Edifier. With its electricity supply reduced to just two days a week, it has to rely on its own generators to maintain a basic level of operation.
“If the situation continues, some shipments will certainly be delayed,” the official said. “We can also think again if we need to lease or build a new factory somewhere outside the country.”
Suppliers to cities in Jiangsu, Zhejiang and Guangdong provinces – where tens of thousands of tech installations are based – say they faced varying levels of electricity restrictions this month as local governments crack down on the energy consumption. Soaring commodity prices, increasing demand for electricity as part of a post-pandemic recovery, and President Xi Jinping’s carbon reduction commitments have all been cited as reasons for the restrictions.
Apple suppliers have previously warned that such cuts pose a threat to supply chain continuity after a week-long power outage in late September. Now concerns are growing that the disruption will prove to be long lasting.
“We’ve heard that the situation could last until the end of this year or even longer,” said an executive at a speaker supplier in Dongguan, adding that the company, which serves Amazon, Lenovo and others, is sometimes limited to only three days. power per week.
“Such an inconvenience could gradually become unbearable,” said the executive. “Now we are reopening our reviews of factories overseas again, perhaps in Vietnam, Batam, Indonesia, or Thailand.”
Edward Yang, chairman of Goodway Machine Tools Group, a supplier to Toyota, Ford and Samsung, said the effects could last much longer than the outages themselves: “Companies operating in China will certainly be faced with tariffs. much higher electricity in the future. This will spur a wave of structural industry changes in pursuit of low carbon emissions while prompting companies to diversify their capacity to reduce the risks of over-centralization. “
The interconnected nature of the supply chain has amplified the effects of power outages. A server maker supplying Amazon’s AWS, Facebook and Microsoft based in the Chinese city of Kunshan said it was relying on stored components to keep production going after many of its own vendors were hit by power cuts. running.
“We are relying on inventory to support our shipments at this time,” a company executive said. “In the meantime, we really want to accelerate our expansion plans in Taiwan earlier. The situation is really dangerous for the continuity of the supply chain.”
To make matters worse, providers say, there is a lack of clarity as to who will receive the power and who will not.
“It is very chaotic and confusing. Some suppliers have managed to source electricity on the basis of their friendly relations and negotiations with local governments, while others have been severely affected,” Nikkei told Nikkei Asia an executive from an Apple supplier. Many large Chinese tech providers, such as emerging iPhone assembler Luxshare and its subsidiaries in different provinces, have also been spared the power cut, according to three people familiar with the matter.
Luxshare did not immediately respond to Nikkei Asia’s request for comment.
Another executive from an Apple circuit board supplier said that local governments decide who to supply electricity to in part based on the value of the products produced: “If you don’t add as much value as, say, screens or terminate semiconductors but consume a lot of power, sorry you are away! You better stop and walk away. “
Printed circuit boards are crucial for the assembly of chips and components, but their value is not particularly high and their production requires a large amount of energy.
The uncertain electricity supplies come against a backdrop of other concerns for companies operating in China.
“It’s not just power issues,” said an iPhone supplier official who declined to be named, as changes in the supply chain are a hot topic in China. “From Jack Ma to the crackdown on gambling and education … all of this suggests growing uncertainty for companies operating in China. People are scared.”
Karen Ma, a researcher at the Hsinchu-based Industrial Technology Research Institute, expects more companies to start diversifying outside of China.
“Previously, only multinational assemblers made diversification plans. But it is foreseeable that other players in the supply chains will move at least some of its production. … Ultimately, their customers like Apple, Google , HP and Dell want a more resilient supply chain beyond China. “
[ad_2]
Source link