China’s Power Pinch Halts Production of Several Apple, Tesla Suppliers

Several Apple and Tesla suppliers have put at risk supply chains in the peak season for electronics goods after halting its production lines at some Chinese factories for several days in order to comply with tighter energy consumption policies China has imposed, Nikkei Asia reports.

Analysts pointed that China’s power crunch is caused by tight coal supplies and the increased coal and natural gas prices, noting that it has triggered a contraction in heavy industry. China initiated a crackdown on energy consumption in order to cut its carbon emissions and implement stricter emissions standards.

Intel, Nvidia, and Qualcomm’s chip packaging suppliers and testing service providers have also received official notices to suspend production for several days.

The mechanical parts supplier for the firms, Eson Precision Engineering, informed on Sunday is will be shutting down production until Friday at facilities in the Chinese city of Kunshan. Eson Precision is an affiliate of Taiwan’s Hon Hai Precision Industry Co Ltd (Foxconn),.

According to Reuters, contract manufacturer Foxconn’s facilities in Kunshan have seen a “very small” impact on production, adjusting only a small part of its capacity there, including the manufacture of non-Apple notebook computers.

Though the company had to move some of the Kunshan workers’ shifts in late September to early October, it has not seen any impact at other major production hubs across China.

Apple’s circuit board maker Unimicron Technology Corp and the Apple’s iPhone speaker component supplier Concraft Holding Co Ltd, on the other side, will both stop manufacturing parts until the end of the month to comply with the local governments’ electricity limiting policy.

Concraft Holding, that owns manufacturing plants in Suzhou city, said it’ll use inventory to meet demand in the meantime.

Apple’s Taiwan-based maker of printed circuit boards, on the other side, said that although three of its China subsidiaries stopped production on Sept. 26, it expect no significant impact as other plants would make up production.

Meanwhile, suppliers that haven’t been affected thus far are preparing for all eventualities. Two major Taiwanese chipmakers Chipmakers United Microelectronics Corp (UMC) and Taiwan Semiconductor Manufacturing Co Ltd, however, said their China facilities are operating as normal.

According to Reuters, UMC’s Hejian plant in Suzhou is currently running at full capacity.

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