The current chip shortage affecting smartphones, computers, game consoles and cars is likely to get worse as China plans to cut power to cut emissions.
According to Tom Hardware, the country plans to temporarily cut power at several major manufacturing centers, and to do so on a scheduled basis in the future. The mandatory power cuts are reportedly an effort to cut emissions as China shifts away from coal-fired electricity. Power outages will likely affect electronics companies like Apple, Intel, Nvidia, Qualcomm, and more.
As of 2019, as much as 65 percent of electricity in China came from coal. Although China has promised the UN that it would not build any more new coal-fired power plants and increase dependence on other energy sources, the transition will take time. With rising coal prices, China has directed the provinces of Jiangsu, Zhejiang and Guangdong to reduce overall energy consumption. That is why local governments plan to cut off the electricity supply to industrial customers and shopping centers for several days a month.
The cuts will affect some companies more than others. For example, Intel, Nvidia, and Qualcomm have production facilities in China that have received orders to halt production for several days in late September. Eson Precision Engineering, a supplier of mechanical parts for Apple and Tesla, received orders to halt production from September 26-30.
Nevertheless, Reuters notes that the restrictions will not apply to manufacturers with continuous production cycles. That includes TSMC and UMC: TSMC makes chips for Apple, AMD, Nvidia, and several other companies.
Apple’s main manufacturing partner Foxconn also closed several facilities on Monday, according to Nikkei. Pegatron, another iPhone assembler, also had to shut down, but has continued its operations with diesel generators. Other manufacturing facilities are considering night shifts to make up for time lost from power outages.
Ultimately, it remains to be seen what impact, if any, mandatory power outages have on emissions. What Tom Hardware notes, most manufacturers will find ways around the restrictions, such as implementing night shifts, using generators, or boosting production at other facilities that are not affected by the limits. In other words, companies will change energy consumption at different times if they can, which could mean that mandatory outages will not have a significant impact on emissions.
Source: Tom Hardware, Reuters, Nikkei