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Business News/ Specials / Power Shortage Hits Vietnam, a Production Hub for Apple and Samsung

Power Shortage Hits Vietnam, a Production Hub for Apple and Samsung


Tech companies face electricity curbs in nation seen as alternative to China

A street in Hanoi as lights are turned off to save electricity on June 5. Premium
A street in Hanoi as lights are turned off to save electricity on June 5.

Vietnam is grappling with a severe power shortage during an early summer heat wave, hitting manufacturers that have flocked to the country because they view it as an alternative to China.

Suppliers to Apple are among the companies that have added production in Vietnam in recent years. The power problem suggests the nation of 100 million people, which grew 8% last year according to the International Monetary Fund, still has infrastructure issues to tackle before it can match China as a location for high-tech manufacturing.

Some production sites of Apple suppliers such as Foxconn and Luxshare Precision Industry as well as Samsung Electronics sites in northern Vietnam received requests from local electricity companies to consider rolling power cuts or at least to cut usage at peak times, according to people involved in Vietnam-based manufacturing.

Those people said the power supply got tight in mid-May and local government officials told them to prepare for power shortages lasting at least through late June.

“Too many electronics manufacturers have expanded production in the area during the past year, and power consumption is simply skyrocketing," one of the people said.

It wasn’t known whether Apple production was affected. The American company has moved recently to increase production of tablets, laptops and other devices in Vietnam.

Representatives from Apple and the Vietnamese foreign ministry didn’t respond to requests for comment.

Apple’s most recent supplier list, released this year, showed that Foxconn and Luxshare both manufactured for Apple in Bac Giang province. The list also includes a Bac Ninh province facility of Samsung, which supplies components for Apple products in addition to competing with Apple in the consumer smartphone market.

Dried-up rivers and scorching heat were cited by local media for Vietnam’s power crunch.

In May, state-owned power company Vietnam Electricity said available power at peak times might fall 1.6 gigawatts to 4.9 gigawatts short of demand during May, June and July. On Wednesday, a local media report, citing official estimates, said electricity supply in the northern power system could fall eight gigawatts short in worst-case scenarios.

At some Vietnamese manufacturing sites for Foxconn, local officials asked the company to consider suspending production from dusk to midnight for 20 days while permitting it to operate from midnight to dawn, according to people familiar with the request. The company is managing to keep most of its operations going for now, but it is looking into building its own power generation facilities next year, they said.

In February, Foxconn signed a deal with Saigon-Bac Giang Industrial Park to lease 111 acres until 2057. The Taiwan-based company has long been known as the leading assembler of Apple’s iPhones with China as its production base.

A spokeswoman at Japanese trading house Sumitomo Corp., which runs industrial parks in Vietnam, said the company received a power-cut request from Vietnam Electricity for this weekend. Sumitomo said it was reviewing the request with its tenants and considering a rolling blackout under which power would be cut off for specified periods.

Rolling blackouts and power disruptions have become a part of daily life in Vietnam, according to local media. The official newspaper of the Communist Party of Vietnam cited an industry ministry official as saying that as of June 6, combined hydroelectric capacity was less than a quarter of designed capacity owing to low water levels, depriving the grid of gigawatts of electricity.

In May, Vietnam struck a deal to import electricity from China’s neighboring Guangxi province, according to China’s central television station. It said Vietnam hadn’t tapped those power transmission lines since 2016.

For the longer term, Vietnam says it will add solar and gas-fired power to support growth. In May, the government approved a power plan stretching to 2030 that it said would ensure sufficient power to support annual economic growth of 7%, according to the state-backed Vietnam News Agency.

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