Taiwan’s export orders fall for ninth straight month in May, but chip sales to India, Malaysia, US offer hope

Orders for Taiwan’s exports, which run on global purchases of its hi-tech hardware such as semiconductor chips, fell for a ninth straight month in May because of weak overseas demand, according to data released on Tuesday. The value of export orders last month declined by 17.6 per cent, year on year, to US$45.68 billion, the Ministry of Economic Affairs said. The figure had fallen by 18.1 per cent in April. “This is because the orders from China and Hong Kong, North America, and the European Union are even lower in May,” said Hu Jin-li, a professor with the Institute of Business and Management at the National Yang Ming Chiao Tung University in Taipei. “Export orders for semiconductors [and] electronics are still at low levels.” Orders from mainland China and Hong Kong declined by 20.9 per cent in May, while orders placed by European buyers fell by 34.9 per cent, the ministry data showed. Deals in the United States to buy Taiwanese goods fell by 22.9 per cent, although it remained Taiwan’s largest export order source in May at US$14.6 billion. Commitments to buy Taiwan’s consumer electronics, the top category with US$15.47 billion in sales in May, fell by 16.6 per cent, year on year. Orders for information and communication products fell by 9.5 per cent to US$12.62 billion, while plastic and chemical orders each declined by more than 30 per cent. Work from home is here to stay and will reverse PC sales slump, Acer CEO says Tech makes up 30 per cent of Taiwan’s US$820 billion economy, and the island supplies around 60 per cent of the world’s semiconductor chips. Demand for tech hardware tapered off in much of the world after the first two years of the coronavirus pandemic, during which consumers bought extra PCs, tablets and phones for work and study at home. Inflation, high interest rates and fears of recession have chilled consumer sentiment since last year. The US economy will grow a scant 0.1 per cent in 2023, the Congressional Budget Office forecasts, though outside analysts have predicted a shallow recession. Taiwan lures more Japanese investments amid China tensions, supply-chain fears The European Commission says economic growth within the bloc should reach 1 per cent this year, while analysts estimate China’s gross domestic product will grow around 5 per cent. Taiwan’s cabinet said earlier this month that it had set a goal of boosting annual trade by 10 per cent to US$1 trillion by seeking new markets. It said it would pursue its goal by “opening new world markets” for exports to offset falling demand from mainland China. And buyers in India, Malaysia and the US have raised their total amount spent on Taiwanese semiconductor chips since at least the start of 2021, Ministry of Finance data from Taipei showed. Taiwan’s migrant-worker reputation hit as Greenpeace flags labour violations Purchases from the US rose from US$204.7 million in January 2022 to an estimated US$296.4 million last month. Sales to India jumped from around US$30 million to US$145 million over the same period, while Malaysian buyers picked up US$751.6 million worth of Taiwanese chips last month compared to US$668.3 million in January 2022. India is stepping up its value-added electronics manufacturing for export as well as its own market, while Malaysia is developing a domestic tech hardware sector. The US is trying to realign global supply chains away from mainland China, but while remaining close to Taiwan. But “structural shifts in general take more time as factories take time to be set up”, said Heron Lim, an economist with Moody’s Analytics in Singapore, earlier this month. Orders to China have already shrunk due to the chip ban Alicia Garcia-Herrero But Lim said Taiwan “will not see a big revitalisation”. Mass production of 2-nanometre chips – the world’s most advanced because of power saving and speed – should eventually lift Taiwan’s exports worldwide, said Alicia Garcia-Herrero, Asia-Pacific chief economist with Natixis Corporate & Investment Banking in Hong Kong. Taiwan Semiconductor Manufacturing Company, the world’s largest contract chip maker, expects to start mass production of 2-nanometre chips in 2025. Existing advanced chips are not lifting export orders, Garcia-Herrero added, because of US and Taiwanese curbs on exports to mainland China. “Orders to China have already shrunk due to the chip ban,” she said.