Risk Center

UFLPA impacts U.S. supply chain for high-tech industries

After six months of enforcement, the Uyghur Forced Labor Prevention Act (UFLPA) continues its crippling effect on supply chains. This is particularly true for consumer electronics and renewable energy, as well as most recently for the automotive industry. Following the implementation of the UFLPA, seizures of non-compliant imports by the U.S. Customs and Border Protection (CBP) surged 63%, totaling 2,692 seizures worth $806 million. The majority of the detained imports have included polysilicon cells and solar panels, both crucial for solar infrastructure and renewable energy projects. Aluminum products used in the automotive industry have recently also been the target of CBP seizures, with authorities issuing detention notices for such products. The UFLPA’s previous focus had also been on cotton and tomatoes, though information on the impact to these products and their supply chains has been seldom reported as of late compared to the focus materials above.

Renewable energy supply chain remains most disrupted

Since June 2022, over 1,000 shipments of solar panels and polysilicon cells have been detained under UFLPA regulations. Xinjiang is home to around 50% of the global production of polysilicon, a high-purity form of silicon used as a key raw material in solar photovoltaic (PV) modules. The UFLPA designated polysilicon as a “high-priority enforcement sector” due to the strong production linkages to the Xinjiang region.

In early January 2023, the U.S. solar industry reported a shortage of solar photovoltaic systems, solar panels, and solar battery bank systems, and an estimated 23% drop in solar installations in 2022. Given the importance of Xinjiang in global solar production, the renewable energies supply chain is likely to see further disruption continuing into 2023.

Automotive supply chains at risk from raw materials disruptions

Traceability has been a longstanding issue in the automotive industry due to the complexities associated with vehicle manufacturing. Automobiles require more components and raw inputs than any other product, totaling between 15,000-30,000 per finished vehicle. This requires an extensive and widespread network of sub-tier suppliers, muddying the waters for determining compliance with the UFLPA regulations.

Most recently though, CBP officials have begun detaining imports of aluminum products that were suspected to have been made with forced labor, particular from Xinjiang.

In addition, sourcing issues with solar modules and polysilicon could also add to complications in automotive supply chains for electric vehicles (EVs). Many EVs rely on solar panels for the recharging infrastructure.

Polysilicon is also emerging as a critical component in high-performance batteries for EVs. China has 80% of global refining capacity for raw materials needed for lithium-ion battery production, including 60% of the world’s graphite production and 80% of global polysilicon production.

Everstream clients are receiving more detailed insights and recommendations about this risk.

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