The heat wave in Sichuan, China is causing concerns regarding disruptions to supply chains around the world.
According to China’s state-run Xinhua News Agency, China has experienced the worst heatwave since June since 1961 meteorological observations. In particular, Sichuan Province has been experiencing a sweltering heat with the highest temperature reaching 40°C since the last 7 days. The hot weather leads to an increase in power consumption. Last month, China’s electricity consumption was 832.4 billion kWh, up 6.3% from the same period last year.
Due to the extreme heat and drought, hydroelectric power generation was also not operated normally. In response, the Sichuan government recently notified the shutdown of the plant through a notice to ‘supply electricity to the people’. In 19 of the 21 cities in the autonomous district, industrial facilities were shut down for 6 days from the 15th, and employees were asked to take a heat wave vacation.
In order to supply industrial electricity to households, the Sichuan government has also included a whitelist of key protection companies in the list of plant shutdowns. CATL, the world’s No. 1 battery supplier to Tesla, China’s largest display manufacturer BOE, Apple’s partner Foxconn, and automotive semiconductor manufacturer Texas Instruments (TI) have suspended operations.
Sichuan Province, a manufacturing hub for global tech companies, recorded 1.461.1 trillion yuan (regarding 283.7 trillion won) in sales in the electronic information industry last year. The 21st Century Business Herald, a Chinese economic daily, interprets that “the power outage of Sichuan province means that the production of electronic information industries in the region, such as semiconductors and panels, is temporarily suspended.” Citing the opinions of some experts, CNN predicted that “the price of both polysilicon and lithium will increase as a result of this plant shutdown.”
On the other hand, there were opinions that the impact of this plant blackout would be limited. Volkswagen of Germany said it was “affected by the deterioration of the electric power situation” but “is only seeing minor damage to the extent that the delivery of vehicles is somewhat delayed.” Foxconn also said the damage related to the plant shutdown is still limited.
I just hope that this heat wave in China does not lead to damage to the global supply chain once more.
Source = Media Bamboo
Arrangement = Reporter Hyungi Kim khk@techm.kr
