Problems for the IT industry: Power shutdown for weeks in China

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From now on, China will supposedly switch off the electricity regularly in various regions and pose new problems for the IT industry. Many companies have production branches on the mainland, many test and packaging centers of well-known companies are there. The first draw consequences.

New hit for the IT industry

According to media reports from Taiwan, the industrial centers have no electricity for up to four or even five days; This first phase can be overcome with inventory levels, the companies said on the Taiwanese stock exchange, in order to calm the excitement about it a little.

The list of companies affected is long, because they are dependent on these manufacturers of small components, PCBs and / or the companies that test and package them. It reads like a who’s who of the industry: Apple, Tesla, Intel, Nvidia, Qualcomm, NXP, Infineon, Pegatron, Foxconn suppliers and others should feel the effects.

Not enough electricity? Too expensive? Environmental Protection?

When asked why, China’s new policy to focus more on environmental protection is the first to be cited. The coal-fired power plants are the most important building block in China’s power generation, but their reputation has also suffered in Asia. China recently announced that it would refrain from building new coal-fired power plants abroad. Domestically, however, things are going on briskly, because the industry is thirsty for electricity, which is why the government continues to build diligently and only declared that it would only reduce CO2 emissions by 2030. The country should be CO2 neutral by 2060, which should be a monumental task.

The shutdowns now are intended to be a short-term response to precisely these announcements. In line with this, however, the currently high prices for coal and gas on the world market, with already very high demand there, also play a role. But not only factories are affected, other areas of life are also expected to experience restrictions. Among other things, air conditioning should not be set below 26 degrees, shopping malls should be closed and elevators should be put out of operation. The overall picture and extent should become clear in the coming hours.

Update 09/29/2021 7:54 a.m.

The power cuts were extended to the middle of the week. According to media reports from Taiwan, around 20 provinces are now affected, ranging from the southwest up the coast to northwest China, but also some inland provinces including Beijing and Shanghai in certain parts. The hardest hit are provinces like Liaoyang and Kunshan. The news of the shutdowns now dominates a large part of the Taiwanese tech media, alone DigiTimes has five articles on the subject within hours yesterday released, various Mass media go along with it. The fact that most of the news comes from here is due to the company’s headquarters, because in Taiwan they have to submit mandatory reports to the stock exchange in the event of problems.

In the meantime, not only PCB producers and IC suppliers are affected, but also the giants of the semiconductor industry such as ASE and GlobalWafers. A return to normality is not expected in October after initial optimism, according to first analysts are even cutting back the forecast for China’s economic growth this year. A new type of rationing based on various criteria could also come into force shortly.

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