Sichuan Suppliers Adjust in Face of Heatwave Work Stoppage

17 AUGUST 2022 - Companies in Apple’s supply chain are “making adjustments” for the drought and heatwave in China. I told you yesterday of concerns for upcoming iPad production. This as the Chinese government told manufacturers in 19 out of 21 cities in the Sichuan province to suspend operation until 20 August so that people could have air conditioning. It might sound like I’m making fun. I’m not. A report in Apple 3.0 says the region is facing its worst heatwave in 60 years. A Reuters report earlier in the week also said that “drought has reduced hydroelectric power generation,” hence having to choose who gets power.

Now, Apple 3.0 highlights another Reuters report that has companies keeping a stiff upper lip. Or keeping their mouths shut. Foxconn declined to tell Reuters how its Sichuan facilities were doing exactly, though the company is said to have said that the hit it’s taking was "not big”.

Meanwhile, would-be iPhone display provider BOE said in a regulatory filing that it’ll “make adjustments” at its Sichuan location. Boy there’s a company that can’t catch a break. It was just last month that they were put back in Apple’s rotation for iPhone 14 displays. Apple benched the company back in May for changing the design of its OLED panels without letting Apple know.

In the face of this week’s shutdown, BOE says it’s expecting “no major impact on its overall operating performance.” The good news on Apple’s side - BOE is not a big supplier by Apple standards. Still, any disruption in the supply chain at this point feels sort of major given all the disruption in the supply chain over the past couple of years.

While BOE telegraphs “no major impact,” one imagines that that’s dependent on being able to hit the start button again at the end of the week. A couple of Twitter posts early in the week from TF International analyst Ming-Chi Kuo indicated that device production should not be impacted in a big way, provided the power problems are behind us by 20 August, and that there are no more disruptions like this one in the coming weeks.

And somewhere, a director yells “Cue the zombies!”