Uncovering Details: Investigative Quest
Power Rationing in China Disrupts Global Electronics Industry
Power rationing measures implemented across 16 provinces in China are causing operational disruptions in factories that are crucial for manufacturing semiconductors and other electronic components used by global tech giants like Apple, Tesla, Intel, NVIDIA, and Qualcomm.
The power strain, driven by record-high electricity demand and extreme heat, has led to production slowdowns or halts in key manufacturing hubs. This situation is worsening existing tensions from trade restrictions and increasing uncertainty in semiconductor lead times, potentially slowing product availability worldwide.
Guangdong Province and Jiangsu Province have imposed power limits on several manufacturing industries to reduce production. As a result, several significant providers such as Intel, NVIDIA, and Qualcomm have received notices requiring their plants in Jiangxu Province to shut down for several days.
Changhua Technology, a semiconductor packaging material supplier of NXP, Infineon, and Rimoonlight, has announced it will stop work from the evening of September 26 to the end of the month. Furthermore, several IC package testers supplying Intel, Pfizer, and Qualcomm have been ordered to shut down their production lines in Jiangsu Province for several days.
The electronics industry is already strained by geopolitical factors, notably US export controls restricting China's access to advanced semiconductor manufacturing equipment and AI chips. This compounds the impact of power rationing by adding supply-side limitations.
Companies like NVIDIA and AMD face additional complexities, including requirements to pay a percentage of China AI chip sales revenue to the US government as part of export license agreements, reflecting the tense trade environment that overlaps with domestic operational challenges.
Despite these challenges, China’s control over rare earth elements, critical for manufacturing electronic components and EVs, gives it leverage. However, power shortages remain a bottleneck that constrains industrial output in the electronics sector.
In China, Tesla sold 67,886 cars in July, continuing a nine-month decline after a brief pause. The automaker's 'budget Model Y' spy shots have shown that it will come without a panoramic glass roof, no continuous light strip, and no rear screens, likely due to cost-cutting measures.
The power outage and shutdown notices have been issued in the provinces of Suzhou and Kunshan, affecting industries including PCB, passive components, ODM / OEM assembly, power supply, and heat dissipation equipment. Yisheng, a subsidiary of Foxconn, has suspended production at its facilities in Kunshan from September 26 to October 1 due to the city's policy of stopping industrial power consumption.
As of September 26, Foxconn's facilities in Longhua, Guanlan, Taiyuan, Zhengzhou, and Shenzhen had not been affected by power rationing. However, the province of Ningxia has forced high energy-consuming enterprises to stop production for one month.
The report focuses on difficulties in September for Chinese automakers, with Tesla revealing the ranges for the Model Y L and Model 3+ in China: 751km and 830/800km respectively.
The power rationing situation in China underscores the complexities and risks involved in global supply chains, particularly in the electronics industry. As the world becomes increasingly interconnected, it's essential to monitor and address such issues to ensure a stable flow of critical components and products.
Sports enthusiasts might find their purchases delayed due to the ongoing power rationing in various provinces in China, as factories essential for manufacturing electronic components used in gaming devices, such as consoles and VR headsets, are affected by the operational disruptions.
The shutdown of factories supplying key materials and components to the tech industry could potentially impact the production of sportswear electronics, many of which incorporate advanced electronic features like Heart Rate Monitors or Smart Fabrics, further highlighting the ripple effects of the power crisis in China on various industries.
