China’s Heatwave Shuts Down Factories

Published on 15 Aug 2022

China, Heatwave, Factories

According to CNN and Bloomberg, Contemporary Amperex Technology Co. Limited (CATL), the world's largest electric car battery manufacturer, and Intel are among the major corporations shutting down their plants in China's Sichuan region for six days due to a power deficit caused by a heatwave.

The action impacts plants belonging to several firms, including Tesla battery supplier CATL, Apple supplier Foxconn Technology, Toyota, Texas Instruments, Volkswagen, and Onsemi, among others.

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An Overview of The Situation

China ordered the shutdown of all Sichuan enterprises until August 20 to reduce the strain on the electricity system caused by China's worst heatwave in 60 years, which led to a spike in air conditioning demand. As per CNN, temperatures surpassed 104 degrees Fahrenheit (40 degrees Celsius) in numerous places.

Sichuan is encountering the "most intense and extreme moment" in its power supply, officials have warned, according to Sichuan Daily, a Chinese state-run news site. This is most likely due to the region's reliance on hydropower, which makes it especially susceptible to the heatwave and drought that is also depleting hydro dam reservoirs. As a result, authorities attempt to preserve electricity for the region's residents.

Why Sichuan Was Impacted

CNN reports that Sichuan is a significant semiconductor and solar panel industry region. Manufacturers travel to the natural resource-rich area in search of raw materials needed in the solar photovoltaic and electronics sectors, such as polysilicon, a crucial solar panel constituent. The province is also an important mining center for lithium, which is used to create batteries for electric vehicles and smartphones.

As the supply of polysilicon and lithium decreases, several experts anticipate that the temporary stoppage might result in a price hike for both materials. Two days following the stoppage, on August 17, industry representatives verified to Bloomberg that the price of polysilicon had increased.

However, several businesses do not foresee a significant impact. According to Bloomberg, Foxconn, which manufactures iPads for Apple in the area, said that the drought has not yet had a consequential effect on them. Volkswagen allegedly said on Monday that it does not anticipate lengthy delivery delays.


Featured image: China Heatwave


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