The northern Vietnam province of Bac Giang, home to suppliers for Apple Inc., Samsung Electronics Co. and other multinationals, is struggling to ensure factories are running normally as blackouts sweep through the country.
Soaring power usage in northern Vietnam could continue amid high temperatures and low rainfall totals, especially with Vietnam heavily reliant on hydroelectric power. Hydro (large and small) accounted for roughly 30% of the country’s power in 2021, second only to coal. However, low water levels in reservoirs during droughts can limit potential output. In early June, six hydroelectric reservoirs stopped generating electricity, according to data from the Vietnam Electricity Group.
Extreme-weather events put global companies at risk after they bolstered their presence in Vietnam as an alternative supply chain during the U.S.-China trade conflict. The northern province of Bac Giang has seen a surge in foreign direct investment this year, largely from multinationals pulling their production bases out of China into Vietnam. This investment uptick defies an overall seasonal downtrend.
Among Bac Giang-based suppliers are Quanta Computer Inc., Apple’s major contract maker of MacBooks, and AirPods maker GoerTek Inc., which established manufacturing bases there to reduce Apple’s supply-chain disruptions. Other Apple suppliers in the region include Hon Hai Precision Co. and Luxshare Precision Co.
However, recent blackouts have hit industrial parks as a severe heat wave drives up electricity consumption. In June, local authorities in Bac Giang ordered factories to move some production until after 10 p.m. local time.
Separately, the Vietnamese government has called on state-owned coal miners and Vietnam Oil and Gas Group to work to ensure power plants have enough fuel. Meanwhile, Prime Minister Pham Minh Chinh has also asked the state utility to negotiate temporary purchase prices with completed wind and power projects that are ready to link to the national grid.
Use Bloomberg’s ECST, MAP, SPLC, WFOR and BNEF tools to assess the impact of unusual weather. Run BNEF to Break Down Energy Sources for Vietnam’s Power Generation.
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