Tesla, Apple Face Supply-Chain Woes Ahead Of Peak Season As China Tightens Energy Consumption Policies

Some key China-based suppliers of Apple Inc AAPL and Tesla Inc TSLA have halted production at their facilities to follow Beijing's tighter energy consumption policy, Nikkei Asia reported on Sunday, citing suppliers.

What Happened: Small and medium-sized suppliers that make key components for Apple and Tesla, such as mechanical parts, circuit boards, chip packaging and testing services, have said they will halt production that could last until September-end or even up to a week.

New Woes For Tesla And Apple: Taiwan-based Foxconn-affiliate Eson Precision Engineering —which makes key mechanical parts for Apple and Tesla — has suspended its production from Sunday until Friday at its facilities in the Chinese city of Kunshan, as per Nikkei Asia.

Unimicron Technology — a major print circuit-board maker and key Apple supplier — is halting production  — from Sunday noon till the end of the month at its subsidiaries in the Chinese cities of Suzhou and Kunshan in Jiangsu Province. 

iPhone speaker component supplier Concraft Holding is suspending production for five days at its facilities in the Chinese city of Suzhou.

Key iPhone assembler Pegatron is running its sites in Kunshan and Suzhou but is prepared with power generators, should the company receive further notice from the city governments, the report noted.

Other US Companies Face Direct Impact Too: Several chip-packaging and testing service providers to Intel Corp INTC, Nvidia Corp NVDA, and Qualcomm Inc QCOM have received notices to suspend production at their facilities in Jiangsu for several days, as per Nikkei Asia, which cited people with knowledge of the matter.

See Also: Key Takeaways From White House Chip Crisis Meet

Why Is China Tightening Grip On Energy? A combination of reasons — including surging coal and natural gas prices and Beijing's efforts to cut emissions — has pushed China to enforce a crackdown on energy consumption, in turn, further risking the global tech and automotive supply chain.

Price Action: Shares of Apple closed marginally higher at $146.92 on Wednesday. Tesla shares closed 2.75% higher at $774.39 on Wednesday.