Escalating tensions in the Middle East are increasing risks to energy supplies, with spillover effects reaching China’s manufacturing sector. While China’s power system—largely reliant on coal—can maintain basic electricity stability, key industries such as petrochemicals, synthetic fibers, and semiconductors remain heavily dependent on oil and liquefied natural gas from the region.
Chinese companies are already experiencing ripple effects. BYD has warned that rising prices for electrolyte solvents and battery separator chemicals could increase per-vehicle costs by 3,000–5,000 yuan (US$440–730) in the second quarter. CATL is accelerating domestic lithium mining and recycling efforts while adjusting logistics to reduce maritime risks. Huawei is reportedly implementing price-protection measures for some products, SMIC is facing pressure on supplies of advanced semiconductor materials, and Xiaomi has issued warnings of potential product shortages due to raw material constraints.
The core supply shock stems from shortages of petrochemical feedstocks. Disruptions in the Strait of Hormuz have reduced Asia’s naphtha supply by about 40 percent, driving up prices of upstream chemicals such as phenol and acetone by 28 percent in mid-March. This, in turn, is increasing costs for semiconductor packaging and PCB production. Several PCB manufacturers have raised prices by 12–15 percent, while shortages of engineering plastics such as polycarbonate and polyamide have forced some suppliers to suspend deliveries. With Brent crude prices exceeding $115 per barrel and competition for energy resources intensifying, analysts warn that if supply constraints persist, global electronics prices could rise in the second quarter of 2026.
Source: Creaders.Net, March 25, 2026
https://news.creaders.net/china/2026/03/25/2985695.html