Uncertainty in China power reduction policy haunting supply chains

Ninelu Tu, Taipei; Willis Ke, DIGITIMES Asia 0


A number of Chinese provinces are enforcing power cuts in line with the country's energy consumption and carbon reduction goals, catching many firms off guard, and it remains unknown whether the policy will become a long-term one.

The power cuts are being implemented in provinces and cities across northeastern and southwestern China, including Suzhou, Kunshan and Dongguang, where many Taiwan-based manufacturers are clustered and they are suspending production through the end of September as required by local governments.

Most makers noted that their shipments will be little impacted by a few days of production halt as they can deliver shipments to clients from their existing inventory. But they stressed that it is hard to assess the actual impacts of the power restrictions on their operations if it they extend beyond the scheduled period.

If normal power supply resumes starting on China's National Day on October 1, makers can easily return to regular manufacturing operations. If not, their revenue and shipment performances will see major impacts.

China has set goals to reach carbon emission peak by 2030 and achieve carbon neutrality by 2060, and how to accomplish the goals will affect its energy supply and consumption policies.