updated 10:35 pm EDT, Mon September 26, 2011
China may see shakeup from wage and power issues
Chinese electronics suppliers may be facing an upheaval across multiple fronts. Part makers claimed that China's mandatory minimum wage hike on January 1 will create a "severe crisis"for the smaller outlets. Many of these have been operating on very thin margins and, combined with lowered sales, might have to declare bankruptcy, Digitimes said. Orders might end up consolidating at heavyweights such as Compal, Quanta, and Wistron.
The step is part of a government-mandated initiative in China to improve the minimum wage by an average of 13 percent every year for the next five years, or about 84 percent over where pay was in 2010. Although important for working conditions and human rights, the plan might hurt companies that were paying low wages out of a lack of resources. Foxconn may be the least affected after multiple pay raises.
Additional sources from notebook component builders told the same site that Chongqing in the country was facing more specific issues. Even the same contract manufacturers mentioned above may be facing labor shortfalls of 20 percent. Some are poaching from nearby provinces to fill the gap, even though they don't get any real advantage and are just trying to save business.
Power and water shortages are also causing problems with reliable manufacturing, the tips alleged.
The issues might not necessarily lead to shortages but create a considerably more fragile PC market, especially for companies that lean the most on companies like Compal and Quanta, such as Acer, Dell, and HP. Apple has some involvement in these companies but depends more on Foxconn than others.