Taiwan’s tech exports remain in free fall, and analysts are ‘still searching for the bottom’
- The island’s exports in March were valued at nearly a fifth less than they were a year prior, and it marked the seventh straight month of falling shipments
- Taiwan tech producers are expected to stay cautious in the coming months amid a foggy outlook
An ongoing slump in global demand for hi-tech hardware, including critical computer chips, has pushed Taiwan’s exports lower for another month, the Ministry of Finance said on Tuesday, and analysts see no turnaround in the near term.
The value of the island’s exports lost 19.1 per cent last month compared with March 2022, reaching US$35.2 billion, the ministry said. The exports have declined for seven consecutive months, largely because of waning worldwide demand for consumer electronics and their parts.
An early-pandemic rush to buy PCs and smartphones for telework and home study has eased, leaving the island’s major tech exporters with excess inventory, economists say.
“Tech producers are still in the process of managing their inventories, and there’s still no clear visibility in terms of outlook, meaning that many of them are still likely to be cautious into the next quarter,” said Tony Phoo, an economist with Standard Chartered Bank in Taipei.
“We are still searching for the bottom,” he said.
Taiwan exports to India keep rising as rest of world orders less
Also last month, Taiwan’s National Development Council issued its sixth straight monthly “blue light” – its gloomiest possible economic forecast for the next half year.
Exports fell by a particularly severe 21.2 per cent in January and by 17.1 per cent a month later, both in year-on-year terms.
The mainland’s reopening has “yet to impact goods demand”, said Heron Lim, an economist with Moody’s Analytics in Singapore.
Shipments to mainland China and Hong Kong – Taiwan’s largest export market – saw a year-on-year drop in March of 28.5 per cent, according to ministry data.
Taiwan Semiconductor Manufacturing, the world’s largest contract chip maker, said on Monday that its revenue last month of NT$145.41 billion (US$4.77 billion) marked a 15.4 per cent drop from March 2022. Fellow Taiwanese chip maker United Microelectronics announced on the same day a 20.11 per cent revenue decrease last month versus a year prior.
PanelSemi, a two-year-old Taiwanese designer of integrated circuits, expects its 2023 revenue to beat the US$18 million earned in 2022 “by a little bit” after growing sixfold over 2021, co-founder Titus Chang said, adding that the company faces price pressure.
“It’s always very difficult to forecast,” Chang told the Post. “The customers like our solution, but we need to negotiate the price.”
Shipments of electronic components, including semiconductor chips, were down by 14.6 per cent last month compared with a year earlier. That export category was Taiwan’s largest, worth US$15.57 billion in March. Exports of communication and audiovisual goods, the second-biggest product category, fell by 15.8 per cent.
Taiwan supplies around 60 per cent of the world’s semiconductors, including the most technologically advanced. Technology accounts for about a third of Taiwan’s gross domestic product.
‘Growing pressure’ for new markets has Taiwan looking beyond mainland China
“We are firmly in the semiconductor downcycle, with major companies indicating inventory surpluses and a lack of demand in the space for now,” Lim said. “Demand for Taiwanese exports is unlikely to see an uptick until some time in the second half of 2023 as we expect more certainty to return to economies, thus restarting goods demand.”
In the inflation-weary European Union, a market for Taiwanese electronics, the economy is projected to expand by just 0.8 per cent this year, per a European Commission forecast.
The US economy will grow just 0.7 per cent this year if regulators stabilise financial markets following recent bank failures, S&P Global forecasts.
Exports to the United States from Taiwan fell by 20.7 per cent in March and those bound for Europe declined by 3.1 per cent, according to ministry data from Taipei.
