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It may be too early, it may not be anything more than a blip, but China is facing a power shortage, and it’s not getting any better. It’s being called a crisis by publications like Bloomberg.
Why it matters:
- Like most countries, energy rationing starts with large industrial users, which are asked to cut consumption when energy supply is limited. Aluminum and cement industries are the first to experience suspensions, followed by other major manufacturers like electronics.
- Reading the reports, it’s easy to see why: In some northern provinces, where heating supplies are now needed during the cold, the effects are being felt by residents who are being asked to limit heating and use of appliances like microwaves, a move politicians usually strive to avoid to limit unrest.
- The reports are now that the woes hitting the global tech and automotive supply chain may get even worse, as key suppliers are forced to power down.
- The Nikkei Asia and others report several key Apple and Tesla suppliers have halted production at some of their Chinese facilities. That isn’t yet affecting Foxconn’s enormous contract manufacturing facilities in Longhua, Guanlan, Taiyuan and Zhengzhou, which is the world’s largest iPhone assembler location, but suppliers to it are being curtailed:
- “Eson Precision Engineering, an affiliate of Foxconn — the world’s biggest iPhone assembler — and a key mechanical parts supplier for Apple and Tesla, on Sunday said it suspended its production from Sunday until Friday at its facilities in the Chinese city of Kunshan.”
- “Unimicron Technology, a major print circuit-board maker and key Apple supplier, said its subsidiaries in the Chinese cities of Suzhou and Kunshan in Jiangsu Province also needed to stop production from Sunday noon till the end of the month.”
- iPhone speaker component supplier Concraft Holding was also powering down per a note to the stock exchange.
- Intel, Nvidia, and Qualcomm may also be affected, with “several key chip packaging and testing service providers” suspending production for days at a time.
The energy issue:
- Summarizing why there’s an energy crunch looks complicated.
- Both coal and natural gas prices have become expensive in China, as they have globally.
- Beijing is enforcing tougher emissions standards and the country “vowed” to cut energy intensity by 3% in 2021 to meet climate goals, and is “punishing” provinces that don’t meet energy restrictions.
- In addition, the Winter Olympics will take place in Beijing next February. The country will be aiming for clear skies to avoid scenes where pollution affects the event and how the world sees China.
- But it’s not exactly looking good: Other reports suggested Beijing is now asking food processors (like soybean crushing plants) to shut down.
- Expect to hear more across the week to come.
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Here’s just some wholesome Blade Runner meme’ing:
(The joke, in case you didn’t get it or haven’t seen the film.)
- Also, GingerRoot updates us on his Instagram account being hacked.
Tristan Rayner, Senior Editor