China’s Sichuan to cut power use to deal with heatwaves, hitting electronics factories

Sichuan's power cut will directly impact local electronics and semiconductor manufacturing firms, affecting other downstream firms.

China’s Sichuan to cut power use to deal with heatwaves, hitting electronics factories
Sichuan, Power cut

Regional authorities in China’s central province of Sichuan said they will cut power supply to industrial factories for six days as the region suffers from heatwaves unseen in 60 years. The province saw a 25% surge in power consumption this year. 

Why it matters: More than a dozen notable electronics and semiconductor manufacturing firms, including BOE, Foxconn, CATL, and Texas Instruments, have factories in Sichuan. The power cut will directly impact their production, affecting downstream firms like Apple, Tesla, and Nio.

Details: The power cut will go into effect from Monday to Saturday, with all factories in the 19 cities of Sichuan province asked to suspend production, including those listed on the so-called “protected whitelist.” But the level of impact seems to vary between companies.

  • Major Chinese display maker BOE confirmed that their factories based in Chengdu and Mianyang would “reduce their power usage to a minimum level” during the period, according to an announcement from the firm yesterday.
  • Foxconn also shut down its factories in Sichuan temporarily. Ming-Chi Kuo, an analyst at TF International Securities, said the cut would “affect iPad assembly plants in Chengdu.” He added that “impacts should be limited if the power outage can end on August 20” and that flexible production scheduling would help to lower the effects.
  • However, some semiconductor firms, including Chengdu Silan Semiconductor Manufacturing, Chengdu CORPRO Technology, and Square Route’s Chengdu sub-firm, told 21st Century Business Herald they are less affected by the policy.
  • CATL, a major Chinese battery maker, also paused production in its Sichuan-based factory yesterday, sources familiar with the matter told Jiemian.

Context: Sichuan is a top area for producing electronics in China’s midwestern region. It brought in RMB 1.5 trillion ($215.6 billion) in revenue in 2021, according to 21st Century Business Herald.

  • There are currently 717 registered firms in Sichuan focusing on hardware and smart devices, according to Qichacha.