Widespread Power Outages in China Have Apple Suppliers 'Scrambling' to Keep Production on Track

[Da_Hood]

China got mad at Australia for requesting an investigation into the origins of of Covid and cut off their coal exports as punishment. Australian coal burns more efficiently than much of the rest of the worlds, and Chinese coal plants have been tailored to it-- they can't turn a profit without it. The CCP has a price cap on what power plants can charge for power, so they can't increase prices-- so if they produce power with less efficient coal, they lose money. So, instead they have turned off the power plants.

It's a lot more than the Covid investigation, albeit it wast the last straw. Fed ripping up Vic belt and road, a number of foreign investment review knock backs, political interference being called out.
Due to govt. directives they will have to buy Aus coal indirectly via 3rd party adding to the cost. Thats what they get for being petty cant's.

 

[MathersMahmood]

Dang! This is not a good news at all.

Apple: Please get rid of China. What is it going to take to realize China isn’t good for us anymore! Come onl

You love saying "get rid of" haha.

Apple won't get out of China as it's cheap to manufacture.

 

[_Spinn_]

Not good news for Apple but I'm worried about shortages for other essential things we get from China. Be prepared for more empty shelves I guess...

 

[Laborant]

China was not only cheap, but also reliable. Just-in-Time production only works, if you can rely on all your suppliers.

Chinas reliability goes down now, so it might become interesting to produce somewhere else - e.g. India. Surely, that does not happen overnight.

 

[1129846]

What is causing the outages? Lack of fuel? lack of power plants? infrastructure issues?

Coal shortage plus local officials being held accountable for reducing pollution. They are reducing power output from the power plants to reduce pollutions.

We need to move production out of china. We need to bring a lot of it back to States and other places.

 

[toobravetosave]

Dang but I want my new iphone every year regardless of the human and environmental costs

 

[Abazigal]

What is causing the outages? Lack of fuel? lack of power plants? infrastructure issues?

A little bit of everything is my understanding.

Increase in coal demand due to rising natural gas prices, but coal supply is not improving due to a combination of crackdowns in Mongolia, and the rest of the world simply not opening new mines. The end result is that existing coal mines simply charge higher prices for coal, while supply remains constrained.

At the same time, I think China also faces higher power consumption due to a hot summer plus less hydroelectric power generated due to an unforeseen drought. At the same time, because electrical prices are fixed, power companies who find it uneconomical to produce electricity via coal will simply opt to shut down, instead of absorbing the losses.

All these came together at the wrong time to hit China stronger than expected.

 

[Drogba11]

Time to update these stock images!

 

[IIGS User]

When are we going to stop relying on China for everything

Those days are coming to a taper quicker than people may think. There's a LOT of economic and geopolitical pressure pushing against China right now.

First is the logistics issue caused by the increase in containerized shipping costs. It used to cost about $2500 to ship a full sized container from China to Long Beach, CA. Now it costs $25,000.

Then, good luck unloading the container in North America with any sort of expediency. Container ships are lined up waiting to port on both coasts right now. Part of the issue is logistical in North America with a shortage of truck drivers to move the freight away from the docs.

Then, the issues surrounding mainland China and Taiwan are starting to heat up again. If the mainland decides to attempt to retake Taiwan, the economic consequences will be world wide, but the mainland will feel the brunt of it. There's all ready sabre rattling on both sides of this issue (This is a business/economic observation, and not a political point. I'm not concerned with the politics of the situation, just the impact on supply chains and manufacturing).

On top of that is the energy crisis in Mainland China.

You can have all the inexpensive labor you want, but if you can't run factories because there's no power, and you can't ship the products you do make to customers, it's becomes really difficult to make money at all. Even if you can ship, the cost has increased to a level that tips the balance of profit and ability to deliver to a negative. It may cost more to manufacture someplace else, but if you can guarantee production, some profit is better than none or the inability to deliver consistently.

A lot of companies and stockholders made a great deal of money on the Chinese gold rush of the past 20+ years, but every party ends sooner or later. It would appear that circumstances are aligning to bring that era to what will probably be a slow decline. Not an end, but the gold rush days are probably over now.

 

[Glideslope]

Does someone who has knowledge of this explain why China is experiencing rolling blackouts?

Lack of generation capacity to meet demand at peak times.

 

[Glideslope]

And what is causing these power outages in the first place? 🤷🏻‍♂️

Lack of generation capacity. Also the reliance heavily on Coal Plants with a fuel shortage. It's far more serious than what the article portrays.

 

[pratikindia]

What is causing the outages? Lack of fuel? lack of power plants? infrastructure issues?

China has stopped import of Australian coal. That’s why they have severe shortage.

 

[bobenhaus]

What is causing the outages? Lack of fuel? lack of power plants? infrastructure issues?

No sanctioned Australia so they cant export coal to China. Mr. Pooh thought that would harm Australia by bullying them. it actually backfired on China.

 

[NYC Russ]

When are we going to stop relying on China for everything

We’ve already started. Everything can’t be moved out in a week.

 

[bobenhaus]

Look above, but in short, it's because of demand - excessive, unexpected surge in export orders. The world has shut down and only China is making stuff.

Wrong. Mr. Pooh thought he had big pants and tried to bully Australia not exporting their coal to China. Tsk Task Mr. Pooh.

 

[ElectricPotato]

China has stopped import of Australian coal. That’s why they have severe shortage.

Many coal plants in China were modified for the higher energy content of Australian coal and can't use local coal. The restrictions on Australian coal was a serious own goal. There are also price controls on electricity so many plants are reducing output because they are squeezed by high costs of coal and low price of electricity.

The government claims environmental constraints for the power outages, just like they did in the latest, deadly Texas grid collapse. It makes a nice cover.

 

[BreakingKayfabe]

We’ve already started. Everything can’t be moved out in a week.

This is true and I started seeing it happening since 2016 when many of my clothing suppliers started making more things in places like Turkey. What sucks is that the raw materials mostly still come from Chy-na though.

 

[NYC Russ]

Stop making everything in China, Apple.

Apple is moving some production out of China. My HomePod Minis were made in Vietnam. Apple is working on Indian iPhone production. It just takes time.

 

[SactoGuy18]

This is why Apple has yet to unveil the M1X-based MacBook Pro 14" and 16". In fact, the very idea of Apple scrapping the M1X-based machines in favor of Macs based on the M2X variant of the upcoming M2 SoC suddenly stops being far-fetched, given the current chip shortage and now power shortage in China. (Yes, you can throw brickbats at me all you want, but if it weren't for the chip shortage Apple would have been producing and selling the M1X-based Macs at least two months ago, in my opinion.)

 

[svish]

Seems like waiting for Apple products after ordering will only get longer.

 

[JMacHack]

Those days are coming to a taper quicker than people may think. There's a LOT of economic and geopolitical pressure pushing against China right now.

First is the logistics issue caused by the increase in containerized shipping costs. It used to cost about $2500 to ship a full sized container from China to Long Beach, CA. Now it costs $25,000.

Then, good luck unloading the container in North America with any sort of expediency. Container ships are lined up waiting to port on both coasts right now. Part of the issue is logistical in North America with a shortage of truck drivers to move the freight away from the docs.

Then, the issues surrounding mainland China and Taiwan are starting to heat up again. If the mainland decides to attempt to retake Taiwan, the economic consequences will be world wide, but the mainland will feel the brunt of it. There's all ready sabre rattling on both sides of this issue (This is a business/economic observation, and not a political point. I'm not concerned with the politics of the situation, just the impact on supply chains and manufacturing).

On top of that is the energy crisis in Mainland China.

You can have all the inexpensive labor you want, but if you can't run factories because there's no power, and you can't ship the products you do make to customers, it's becomes really difficult to make money at all. Even if you can ship, the cost has increased to a level that tips the balance of profit and ability to deliver to a negative. It may cost more to manufacture someplace else, but if you can guarantee production, some profit is better than none or the inability to deliver consistently.

A lot of companies and stockholders made a great deal of money on the Chinese gold rush of the past 20+ years, but every party ends sooner or later. It would appear that circumstances are aligning to bring that era to what will probably be a slow decline. Not an end, but the gold rush days are probably over now.

We’re living in a black swan event, nobody really knows what the future holds.

 

[rjjacobson]

Coal shortage in the country, and rising coal prices globally.

Yes rising prices for sure. The coal shortage is because of rising difficulties between China and Australia where they are getting a lot of coal from. Disputes have led to price increases as well as Australia holding shipments I recall reading. There are big concerns growing by Australians about China controlling too much of there economy and sitting just to North — hence recent nuclear sub deal with US for example as the Cold War between US and. China grows which is bound to cause further problems down the road with all our companies doing so much manufacturing in China. A big mess but they sure won’t be moving manufacturing back here anytime soon (lack of manufacturing facilities, costs to businesses for paying American workers ect)

 

[EM2013]

What is causing the outages? Lack of fuel? lack of power plants? infrastructure issues?

I don’t get how they’re trying to push electric cars so bad but have issues like this. We had bad power outages here in Tx during the ice storm.

 

[AxiomaticRubric]

The new 2021 MacBook Pro

Available for only $10,000.00 USD on eBay.

😭

 

[rjjacobson]

Yep, the theological autocracy that is my state of Texas.

We’re basically Mississippi, but with money.

ONe of issue on Australian coal I mentioned elsewhere is a growing conflict between two countries that has lead to price increases by Australian producers and actual stopping of shipments to China as the tension grows between two countries. Many in Australia are now worried about China dominating their products (including purchases) and having this superpower to their north (see the recent US nuclear sub deal). Things are just getting weirder as governments rely on resources sometimes hard to get and then there is this pandemic thing ;-)