The world is already facing tight constraints on the supply of electronic components, but now China has added another into the mix—there’s not enough energy being produced to meet demand.
As Reuters reports, a perfect storm of attempting to meet climate pledges on energy use combined with “tight coal supplies” means power is being rationed across northeastern China. This has resulted in factories temporarily closing down with the reason given being to “comply with the local governments’ electricity limiting policy.”
Apple suppliers Unimicron Technology, Eson Precision, and Concraft Holding have all decided to close factories for several days. Other factories are thought to be reducing production as a way of adjusting to the energy constraints. Meanwhile, China’s National Energy Administration (NEA) has told coal and natural gas energy firms to prioritize energy supplies to keep homes warm as temperatures drop to freezing in the north, suggesting this could be a problem that lasts for several months.
The problem China faces is not only limited supplies of coal, but honoring a commitment to cut energy intensity by 3% during 2021. According to Reuters, only 10 of 30 mainland regions have achieved their energy goals during the first half of the year, placing mounting pressure on them to cut energy use even more over the next three months to catch up and hit their targets.
Although Apple and Tesla are the two companies highlighted as being affected by the cut in production now, it seems likely any company relying on manufacturing in China will eventually be impacted. So far, United Microelectronics and TSMC have reported no drop in production at their factories in China, while Foxconn has only made small changes.
