Power Outage Affects China LED Indutry

The shock to LED display industry due to shortage of semiconductors has not gone far. Another issue that Power outages hit LED productions once again. Problems with power are sweeping across the world. The effect of a new wave of power shortages on the supply chain in China has been noted by major media globally.

Thanks to the COVID-19 that has widely spreaded in many countries but been well controlled in China, a lot of orders turned to China Manufacturers. Surging demanding for Chinese goods makes the demand for Electric Power climbing up quickly in 2021. At present more than 50% electricity power are still coal-fired. However, China has made a grand plan to make the country carbon neutral by 2060. So the production of coal got slow down in past years. Then China has to import plenty of coal from other countries like Autralia. That results in coal price increased high, around 5 times. With strict controls on electricity prices and rising coal prices, coal-fired electricity power plants have been unwilling to operate at a loss, with many reducing output.

In this case, China has now introduced a “Dual Control of Energy Consumption” policy that will affect manufacturing generally and specifically Shenzhen, Fujian and other major manufacturing hubs.
Many factories including LED manufacturers have to switch to mode "run for 7 days and stop 7 days", or "3 days off and 4 days on" from September 2021 to March 2022 under the requirement of government.

Although there is global surgung demand for Chinese goods, the manufacturers will not get benefit due to fierce internal competition. Semiconductor shortage and power outages have made the raw material price increased. LED manufacturers have to increase price a little to cover the material cost increasing. But this increasing cannot keep up with the materials.  

Power outages have made the situation more serious. It will cause an additional delay of delevery for China manufactured goods. In Shenzhen where many LED manufacturers are based, the finished goods lead time will longthen due to raw material longer lead time. Form November 2021 through March 2022, accompanied with Christmas and Chinese New Year, the lead time and shipping time might delay a lot as estimated.