Iphone Factory ChinaSource: Apple

What you need to know

  • Apple suppliers are battling power supply issues in China.
  • A new report says suppliers are scrambling to keep production on track.
  • The report says shipments could definitely be delayed if the situation continues.

A new report says that suppliers of devices like Apple's iPhone 13 are scrambling to keep production on track as power shortages his China.

From Nikkei Asia:

Widespread power outages in China are reigniting a push by tech manufacturers to shift production away from Asia's biggest economy, with suppliers to Apple, Amazon and others scrambling to keep production on track ahead of the busy holiday season.

At a midsize electronics accessories maker in Zhongshan, Guangdong Province, power outages have become the new normal.

One source reportedly said power outages had been sporadic since June but had become regular since September, with suppliers receiving notice each week of days where there will be no power. With Apple suppliers having previously warned of product supply disruption, the new report warns of growing concern of longer-term issues:

Apple suppliers have already warned that such cuts pose a threat to supply chain continuity following a weeklong power outage in late September. Now concerns are growing that the disruption will prove long-lived.

Another executive said the situation could last through the end of the year "or even longer", and that suppliers were considering their options overseas in places like Vietnam or Indonesia. An Apple supplier executive described the situation as "chaotic and confusing":

"It is very chaotic and confusing. Some suppliers managed to secure power supplies based on their friendly relations and negotiations with the local governments, while some were affected badly," an executive at an Apple supplier told Nikkei Asia. Many large Chinese tech suppliers, such as emerging iPhone assembler Luxshare and its subsidiaries across different provinces, were also spared from the power suspension, according to three people familiar with the matter.

Another Apple supplier said that local governments were prioritizing suppliers based on the value of the goods they were making. Apple has reportedly asked suppliers for 90-95 million units of its new best iPhone, and is also experiencing supply issues with the Apple Watch Series 7, which goes on sale for pre-order today.