PC component factories must close due to record heat

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A heatwave in China this week disrupted the operations of laptop component makers and assemblers in Sichuan province and Chongqing municipality, creating the possibility of further problems in technology supply chains.

The closures are the result of power outages ordered by the Chinese government on Sunday. Sichuan’s Department of Economy and Information Technology issued power cut advisories, which prioritized residents’ access to juice on a power grid strained by a heat wave.

Some measures to reduce electricity consumption have been in place in the region since the end of July. The recent government notice imposes stricter measures on industrial users between August 15 and 20 in 19 cities in the region.

Sichuan is a hub for manufacturing laptop computers and producing lithium batteries used in electric cars and many mobile devices.

According to state-sponsored media, apple supplier Foxconn said the power outages will only have a limited impact on production. The company’s Chengdu plant, located in Sichuan province, assembles Apple watches and computers. iPhones are made elsewhere in China, primarily in Zhengzhou and Shenzhen.

PC component suppliers Quanta, Compal and Inventec also have factories in the affected cities. The Reg has contacted all three manufacturers and will update this story if it provides substantial information.

“Although it is difficult to assess production impacts at this time, impacts should be limited if the power outage can end on August 20,” said Ming-Chi Kuo, analyst at TF International Securities. “In addition, flexible production scheduling by assemblers should also help reduce the impact of power outages. However, care should be taken whether similar incidents will happen again in the coming months and affect Apple’s new product shipments during peak season,” Kuo added.

Sichuan is believed to depend on hydroelectric generation to provide more than 80% of its electricity, but drought has reduced output as demand for air conditioning has soared to tame temperatures that have topped 100°F/38°C in recent years. days.

Earlier this year, Chinese factories were forced to close for an entirely different reason – coronavirus outbreaks amid China’s pursuit of zero COVID momentum. At that time, facilities could maintain production using a “closed loop” system in which essential workers were housed on-site. This strategy is less applicable when factories cannot start.

At the time, Chinese tech officials warned of impending supply chain chaos. In late July, Counterpoint Research recorded a historic year-over-year drop in PC shipments. The market research firm attributed the drop to the closures.

In June, Gartner predicted that global PC shipments would decline 9.5% in 2022, “the largest decline of any device segment this year.”

The supply chain pain has been felt by companies like Samsung, Nvidia and many others.

It remains to be seen whether this new round of shutdowns will lead to similar issues. ®

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