China Power Shortage: IQD’s Challenges and Outlook on the current situation
Posted: 14th October 2021
IQD, in common with the majority of component suppliers, has recently experienced supply disruptions from raw material suppliers, lack of capacity, extremely long lead times or even allocation in the 32.768 kHz market as well as allocation of critical semiconductors, which we are managing with our manufacturing partners.
Now there is a potential for further disruption to supply chains due to the problems in the availability of power in the major manufacturing centres in China, which has led to partial factory closures in some isolated areas. As world economies have eased COVID-19 restrictions, there has been excessive demand in the market, particularly for electronic components accentuated by the upcoming Christmas rush, which is traditionally a hectic time for manufacturers in China. In addition to potential supply chain disruption, the consequences of the rise in demand for electricity is the increase in the price of coal, which predominantly powers the Chinese economy, putting further pressure on factory output prices.
The situation for IQD is robust at the moment, where our manufacturing partners do not expect any major disruption to production from what we’ve described above. However, we are not complacent about this and are constantly monitoring the situation. There have been some restrictions on power supplies, but our partners have managed to work around these restrictions with a modest effect on production capacity. Currently, the situation is very fluid, and we are in constant dialogue with our supply chain to ensure continuity of supply. At the moment, any impact on cost has been absorbed by our partners, but clearly, this additional threat to factory prices has not gone away, and we may see an impact on our pricing in future.