William Gallagher
Regular power outages decided on by the Chinese government to save electricity, now look permanent — and technology manufacturers say they are being scared into moving to different countries.
Since June, China's government has been forcing companies to shut down at times to save electricity. Now firms say they get weekly notifications of which days they will have no power, and fears that this is permanent are reviving aims to move away.
According to Nikkei Asia, the situation is being exacerbated because there is no clear pattern to which companies are being affected.
"It is very chaotic and confusing," an unnamed executive at an Apple supplier told the publication. "Some suppliers managed to secure power supplies based on their friendly relations and negotiations with the local governments, while some were affected badly."
Companies spared reportedly include iPhone assembler Luxshare, according to unspecified sources. Some other Apple suppliers believe that there is a logic to how the local government is determining who gets power, and who loses it.
"If you don't bring as much value as, say, displays or high-end semiconductors but consume a lot of energy, sorry you are out!" said an executive in a company that provides Apple with printed circuit boards. "It's better that you just shut down and move away."
The concerns over power supplies come as firms in the region say they are now also worried about operating in China.
"It's not just about power issues," said an unnamed iPhone supplier. "From [the disappearance of] Jack Ma to the crackdowns on gaming and education ... these all suggest increasing uncertainty for enterprises operating in China. People are scared."
Jack Ma runs Alibaba, a firm whose technology products in cloud computing reach almost 800 million users. Always outspoken, he criticized the Chinese banking system in a speech in November 2020 — and was then not seen again in public for about three months.
These concerns, and a presumption that power outages will continue, is reportedly prompting companies to reconsider their Chinese operations.
"We heard that the situation could last till the end of this year or even longer," an executive from a speaker supplier told Nikkei Asia. It's not known if the unnamed executive's company supplies Apple, but it does sell to Amazon, Lenovo and others.
"Such inconvenience could be gradually unbearable," the executive said. "Now we are again reopening our evaluations of overseas plants, perhaps in Vietnam, Batam in Indonesia, or Thailand."
Apple and other technology firms have long been either considering or implementing plans to move production away from China. It's chiefly been because of fears of over-reliance on one source, but there have also been issues over US/China trade tensions.
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92 Comments
This is a classic example of the failures of communism, big government and central planning. They can’t keep the lights on! The article, which in many ways from a journalistic perspective, isn’t written well - doesn’t answer the basic question of why there is a power shortage in China. It also speaks to the corruption of big government. Companies with political influence, and by inference, the resources to bribe officials, are the ones who get electricity (sounds a bit like what’s going on in Washington D.C.) You can be sure if companies are being denied electricity, private citizens are going without power in their homes. Do global warming alarmists really think China is going to limit CO2 output when they are bringing new coal burning power plants online every week, yet still can’t meet power demand? Apple should have been undertaking a serious effort to leave China a long time ago. But the lure of cheap labor and easier profitability has kept them there longer than they should have been. So wake up America! The siren’s lure of big brother government being the provider of the basic necessities of daily life touted by the likes of AOC, Bernie, Biden, Nancy and Schumer are deceptive and false. California, which is already a semi-socialist state, is well on its way to being unable to meet everyday power needs during periods of peak demand. Gavin Newsome and his ilk in Sacramento falsely think they posses the intellectual superiority to control the basic economic, environmental and societal variables of California to lead to optimal outcomes for the citizens of California. Given the outflow of people and companies from California I would argue they are failing. Tesla is moving their headquarters to Texas as a very recent example of this. Not to mention the California problems with homelessness. Apple’s next big worry is TSMC and their reliance on Taiwan for Apple CPU’s. If Apple were smart they’d be knocking on the doors of Intel and other domestic chip producers and start developing backup supply chains for chips. This is a multi-year effort so get started now! The China pendulum has reached its apex. Time for new plans Apple!
On the business report on CBC Vancouver a couple of days ago the reporter was asked about these power outages. He said that yes it was due to higher coal prices but the reason coal was more expensive was the interesting part. World coal prices are low, but China got a huge portion of its coal from Australia. China is annoyed with Australia and has stopped buying their coal. But there isn’t enough surplus coal or natural gas on the world market to make up the difference. At root this isn’t a structural problem, or due trying to move to a low carbon economy, something that has been blamed in some reports. At root it’s the Chinese government, meaning Xi, has gotten their nose out of joint at Australia, and the people are paying for it.
And if the climate change radicals get their way this is the future for the U.S. Learn to live one or two days a week without power... to save the planet of course.