Launch of iPhone 6 set to bolster Taiwan’s second-half exports

PUBLISHED : Wednesday, 20 August, 2014, 9:55am
UPDATED : Thursday, 21 August, 2014, 12:37am

Taiwan's export orders expanded less than expected last month even as factories rushed output before new smartphone launches, pointing to erratic demand in some of its major markets.

New product launches, particularly Apple's anticipated iPhone 6 smartphone next month, are expected to bolster Taiwan's economic expansion this year amid a patchy global recovery.

The Ministry of Economic Affairs, however, sounded a warning about potential delays in the current quarter.

"Third-quarter orders for handheld devices could be hit due to uncertainty resulting from some companies' product launches," the ministry said. "But we're still optimistic about the second-half outlook."

We’re looking at Apple-related orders being less than expected or [another] factor

July export orders rose 5.7 per cent from a year earlier. June's rise was the fastest pace in 11/2 years.

Orders from the United States slowed to 1.5 per cent in July from a 6.7 per cent growth in June, while orders from China also eased to a 9.2 per cent growth from 14.5 per cent growth in the same period. They are Taiwan's two biggest markets.

Analysts said July's slower order growth could be due to semiconductors or the volatile nature of products shipping in large batches.

"We're either looking at Apple-related orders being less than expected or some other factor that has offset otherwise strong Apple orders," said analyst Anita Hsu of Masterlink Securities Investment Advisory in Taipei.

"A likely culprit could be semiconductors, as the comparison period last year was already very high. But Apple-related orders for the entire third quarter should be enough to offset this and there's still a distinct chance that this strength will be reflected in August's number since this month was weak," she said.

"You usually don't hit critical mass until about three to six months after the launch," said Wai Ho Leong, regional economist at Barclays Capital in Singapore.

Orders last month totalled US$38.18 billion, compared with June's US$38.82 billion, which was up 10.6 per cent from a year earlier.

Taiwan's export orders are seen as a leading indicator of demand for Asia's exports and hi-tech devices, and typically can lead actual exports by two to three months.

Economists expect the momentum to continue in the second half although it may be too soon to tell how much the orders will translate into actual exports.