Blackouts in China threaten Tesla and Apple supplies

Several Apple and Tesla suppliers announced on Sunday and Monday the suspension of production operations in China due to limits imposed by local authorities on the use of electricity. In recent days we had already told you about blackouts in various regions of China due to poor energy production.

The latest is Pegatron, who assembles iPhones at manufacturing plants in Kunshan and Suzhou, announced on Monday that it is "taking energy-saving measures to comply with local government policies," according to Bloomberg .

Pegatron said on Sunday that all operations were proceeding normally and that he had set up generators and alternative sources for any blackouts. Evidently it was not enough.

"In recent years Pegatron has taken energy and water saving measures and there is a comprehensive response program for the current situation to reduce the impact on our operations and production capacity," the company said in a statement.

It is not immediately known what the supply chain disruptions will be for Apple and Tesla. Other suppliers have also had the electricity outage and will last from a few days until the end of the month.

Pegatron wasn't the only company affected: Foxconn subsidiary Eson Precision Engineering, one of the world's largest iPhone assemblers and component suppliers for Apple and Tesla, announced today that it has suspended production Sunday through Friday in its factories in the Chinese city of Kunshan in response to the city's environmental measures.

"The company will use its inventory to maintain the operation while production is halted," Eson wrote in a statement to the Taiwan Stock Exchange. "We plan to organize production on weekends or upcoming holidays [next month] to meet customer needs."

it seems that Beijing has made a real energy squeeze on the most productive provinces, and therefore the most energy-consuming, precisely to limit the expenditure of coal for power plants in a time of rising prices.

Sources said Unimicron Technology Corporation, a major printed circuit board manufacturer and a major supplier to Apple with factories in Suzhou and Kunshan in Jiangsu Province, was forced to suspend production until the end of the month. On Sunday, the company said it will move production elsewhere to limit inconvenience.

IPhone speaker supplier Concraft Holding released a document on Sunday stating that its manufacturing facilities in Suzhou would be suspended for five days.

Sources said Foxconn's manufacturing plants in Longhua, Guanlan, Taiyuan and Zhengzhou will be shut down in the next few days.

Another chip supplier, Chang Wah Technology, which manufactures components for NXP, Infineon and ASE Tech Holding, announced that it would have to suspend production on Sunday until the end of the month to comply with the government order.

There are 23 Chinese provinces that have missed the energy generation targets set by Beijing and are now under pressure to curb energy consumption. The broader implications could be another "shockwave across the global automotive and technology supply chain, which has already experienced unprecedented chip and component shortages and is still experiencing disruptions from COVID variants in Vietnam and Malaysia," he said. Nikkei said.

A beautiful disaster that will have very strong consequences on a series of prices of products not only of Apple and Tesla, but, in general, of a technological nature. A stagflationary shock on consumer products that will reduce their sales.

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This is a machine translation of a post published on Scenari Economici at the URL on Mon, 27 Sep 2021 20:14:29 +0000.