China is in the world Largest energy consumer,as well as The biggest carbon dioxide emitterAllegedly, in order to limit energy operators’ price spikes and reduce emissions, the Chinese government temporarily shut down the power supply to several major manufacturing centers. The country also intends to suspend industrial power supply as planned in the future. Such a blow will inevitably affect the global electronic product supply chain and companies such as Apple, Intel, Nvidia, Qualcomm, and Tesla. But some companies will be more severely affected than others.
Want to reduce emissions? Cut off the power!
Last week, Chinese President Xi Jinping stated at the United Nations General Assembly that China will not build a new coal-fired power plant in the future, and will increase its dependence on other energy sources, and will achieve carbon neutrality by 2060.But as of 2019, approximately 64%-65% China’s electricity comes from coal, and the price of this industrial-age energy is now soaring.
To control carbon dioxide emissions, the Chinese government requires Jiangsu, Zhejiang and Guangdong provinces (where many high-tech manufacturers are located) to reduce their total energy consumption. Due to the inability to quickly implement new energy-saving technologies or install new energy-saving equipment, local governments in some provinces plan to cut off power to industrial customers and shopping malls for a few days a month. Nikkei report.
Although these drastic measures will inevitably reduce China’s average carbon dioxide emissions, they will also temporarily reduce the consumption of commodities such as coal, oil and natural gas, which may affect their prices and should also help energy producers. Purchase bulk commodities at lower prices. Price, stabilize their business.
Since China has produced such a large amount of world consumer technology, such restrictions will have a global impact on the already tense electronics and semiconductor industries. But different companies will deal with the impact of these restrictions in different ways.
Some people stop production
Many Taiwanese outsourced semiconductor assembly and test (OSAT) suppliers that provide services to companies such as Intel, Nvidia, and Qualcomm have production facilities in China. Recently, these companies have received notices from local authorities requesting them to suspend production at their plants in Jiangsu for a few days in late September. Given that OSAT receives wafers from customers and cannot move them quickly, the suspension of facilities means delays in shipments or night shifts after the power supply is restored.
According to reports, Changhua Technology, a chip packaging material supplier that cooperates with ASE Technology, Infineon and NXP, confirmed in a stock exchange document that the authorities required it to stop production from September 26 to the end of this month.
Eson Precision Engineering, which supplies mechanical parts for Apple and Tesla, also said that it was ordered to suspend production from September 26 to September 30, but it will meet customer needs by requiring workers to work night shifts.
“Kunshan City will stop the use of electricity for industrial production from September 26 to September 30, so the company cooperates with the suspension of production,” Essen stated. Demand for shipments.”
Unimicron Technology, a major manufacturer of printed circuit boards (PCB), will also stop its production facilities in Jiangsu Province, but will increase the output of other facilities to meet demand.
Others will not stop
But not all manufacturers in the aforementioned regions have to temporarily stop production.
According to the report, these restrictions will not apply to manufacturers whose production cycles are continuous and cannot be stopped, including semiconductor manufacturers. Digital ageTherefore, TSMC and UMC fabs will continue to operate, the report Reuters.
In addition, it is reported that companies paying more taxes or small companies engaged in advanced, professional and technologically advanced fields will not be affected by the power outage. In the digital age, Quoting an anonymous source with knowledge of the matter.
Foxconn, the world’s largest electronic manufacturing services (EMS) supplier, did shut down its production facilities in Longhua, Guanlan, Taiyuan and Zhengzhou earlier on Monday. Nikkei. Foxconn is Apple’s largest production partner, producing iPhone, iPad, MacBook and countless other products.
Pegatron, another major iPhone assembler, told Nikkei News on Sunday night that its production facilities are operating as usual. At the same time, the company has prepared diesel generators and can use them if the authorities order it to stop local operations due to power restrictions.
In fact, although most electronics manufacturers in China have unloaded diesel generators from their production facilities in recent years, some companies still use them. For these companies, production may still continue, although costs will be much higher during power outages.
China generally does not belong to The most polluted country in the world (But some of its cities are among the most polluted), but its carbon dioxide emissions are more than any other country in the world, and by 2030, its emissions will continue to rise. However, the country is trying to control emissions and energy consumption through its companies, which is why it is implementing quite drastic measures and cutting the power consumption of industrial consumers in some provinces. These measures may also help temporarily reduce the spot prices of coal, oil and natural gas, but this impact will be mitigated by traders, and ultimately will have little long-term impact on the prices of energy transporters.
But will these measures work and reduce carbon dioxide emissions and/or energy consumption? Or have a major impact on the electronics industry?
Since major electronics manufacturers have manufacturing facilities in areas not affected by power outages, they can temporarily increase the output of other facilities to meet demand for their products. Those companies that cannot do so will introduce night shifts to achieve production goals and make up for lost revenue. Some companies have diesel generators that can work even if they cannot get energy from the grid. Finally, some chip manufacturers cannot temporarily stop production and continue operations.
Generally speaking, commercial companies will adapt to restrictions and will find ways to achieve their shipment targets, which means that their emissions and energy consumption will remain the same. Of course, the power outage will have a temporary negative impact on the already tight electronic supply chain, but it will be alleviated.
The by-product of the temporary suspension may be China’s leverage in the trade war with the United States, but since Chinese companies will adjust their operations to meet requirements, the new policy will hardly have any major effect in this regard.