Will China turn off the power to iPhone factories?
The energy crisis in China could affect companies that supply components or assemble Apple's iPhones. Here's what we know
Pegatron, a Taiwanese electronics company and a close associate of Apple for the assembly of iPhones, said it was adopting energy-saving measures to comply with the new directives of the Chinese government.
The news is significant because, in addition to telling the energy dynamics of China, it could be a forerunner of production problems for Apple.
WHAT IS HAPPENING IN CHINA
In some parts of China, the government has imposed energy rationing for industrial plants to avoid the spread of a broader crisis, which is already affecting both commercial buildings and homes.
Due to lower coal production and tightening measures on polluting emissions, the country is having difficulty in ensuring sufficient supplies of electricity for industrial activity, for powering shop lights and for domestic consumption. All this while in some northern areas of the country night temperatures have dropped a lot, increasing the demand for energy for heating.
Energy rationing also affects two provinces that are important for the national economy, namely the industrial poles of Jiangsu and Guangdong.
THE REPERCUSSIONS FOR APPLE
Beyond the announcement, it doesn't appear that Pegatron's operations have been harmed, at least so far. Indeed: according to sources heard by Bloomberg , it seems that the company – as well as others always operating in the technology sector – has been guaranteed preferential access to energy that allows it to continue with its operations.
Sources also say that Pegatron's factory in Kunshan, Jiangsu, where Apple's smartphones are produced, will only be affected to a limited extent by the energy crisis. There has so far been no significant impact on operations and deliveries even at Luxshare's nearby iPhone assembly facility.
Two other crucial factories for Apple's supply chain were also uninterrupted: Pegatron's iPhone factory in Shanghai and Foxconn's in Zhengzhou.
THE PEGATRON PRESS RELEASE
In a statement, Pegatron announced that it had adopted energy and water saving measures for some years and that it had developed an "overall response program" to the current situation.
MONITORED SITUATION
According to information received from its sources, Bloomberg writes that the iPhone supply chain is showing resilience to the Chinese energy crisis, but Apple's suppliers are still monitoring the evolution of events.
Reuters, however, points out that Unimicron Technology, an Apple supplier, has stated that three of its Chinese subsidiaries will have to stop production until midnight on September 30, from noon on September 26. Also Confract, from which Apple purchases components for the iPhone cases , announced that it will suspend production until Thursday, but will still be able to meet demand levels with its inventory.
THE IMPORTANCE OF THE TECHNOLOGICAL SECTOR FOR CHINA
The fact that Apple's suppliers, unlike other industrial entities, have not been greatly damaged by the energy crisis is explained by the importance of exports for the Chinese economy.
Foxconn and other electronics companies are among those that export the most abroad, as well as those with the most employees.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/cina-iphone-consumi-energetici/ on Mon, 27 Sep 2021 10:45:38 +0000.