Power Crunch Causes Key Suppliers of Apple and Tesla to Stop Production in Eastern China’s Jiangsu Province

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(Source: VCG)

Due to a continuous shortage of power supply, many provinces and cities in China have adopted power restriction measures recently, which has had an impact on the production of some major enterprises, Chinese media outlet Jiweinet reported. 

Several key suppliers of Apple and Tesla have announced that they will stop production in China, and that their supply chains will be at risk during the peak season of electronic products such as new iPhone models.

According to the Nikkei Asia, ESON Precision Engineering, a major supplier of mechanical parts for Apple and Tesla, said on Sunday that its factory in Kunshan, Jiangsu Province, has suspended production from Sunday to Friday in response to the city’s policy of stopping industrial electricity supply. ESON pointed out in the announcement that during the shutdown period, it will temporarily maintain its operation with existing inventory, and it is expected to arrange production on holidays to meet customer needs.

Unimicron, Apple’s printed circuit board supplier, said that the company’s factories in Suzhou and Kunshan will also need to stop production from noon on Sunday to the end of this month, and will mobilize the production capacity of the firm’s other manufacturing bases to mitigate the impact.

It is reported that Apple’s acoustic component supplier Concraft Holding, which has a factory in Suzhou, also announced that it will stop work for five days until noon on Thursday, and will rely on inventory to meet customer needs.

Pegatron, a major iPhone assembler with large production bases in Kunshan and Suzhou, said late Sunday that their plants were operating as usual but had generators ready for further notice from the city government. In addition, another Apple assembler Foxconn has not been affected by power supply restrictions at its manufacturing plants situated in the cities of Shenzhen, Taiyuan and Zhengzhou.

According to informed sources, several major chip packaging and testing service providers, such as Intel, Nvidia and Qualcomm, have also been notified to shut down their factories in Jiangsu Province for several days, which will further impact chip supply across the electronics industry.

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Chinese media outlet 21st Century Business Herald reported that the electricity and production cuts are causing disruptions in at least 10 provinces including Jiangsu, Zhejiang, Shandong, Guangxi and Yunnan.

Behind the power cuts, there are two main factors. First, the tight supply and the high price of coal have severely affected the supply of electricity. Second, in order to reach peak carbon emissions and achieve carbon neutrality targets promised by the Chinese government, some regions have adopted energy consumption control measures due to the pressure of controlling energy consumption intensity and total volume.