Taiwan’s hi-tech export orders resume rise as world gears up for AI, unvexed by interest rate pressure
- Worldwide demand for components that speed up artificial intelligence computations is growing, and it likely helped Taiwan’s cause in January
- Orders by value topped US$48 billion last month, and these also include semiconductors, electronics for cars, and electric vehicle components
Global tech production hub Taiwan has reported a monthly gain in its all-important export orders due to growing demand for AI-related devices, and the rise came despite persistent pressure from high interest rates.
The value of orders firmed by 1.9 per cent to US$48.42 billion last month, year on year, the Ministry of Economic Affairs said on Tuesday.
The island, whose economy relies on the production of tech hardware and is regarded as a bellwether for the global health of consumer electronics, had reported 14 straight months of year-on-year declines in export orders before the figure edged up by 1 per cent in November. Orders then fell again in December.
Further evidence of a rise in worldwide demand for components that speed up artificial intelligence computations probably helped Taiwan’s cause in January, according to analysts.
AI has become the next big thing in Taiwan’s exports and industrial development
“Orders for AI products keep rising,” said Hu Jin-li, a professor with the Institute of Business and Management at National Yang Ming Chiao Tung University in Taipei.
“AI has become the next big thing in Taiwan’s exports and industrial development,” he added.
The global AI-optimised hardware market could see a compound annual growth rate of 25.9 per cent from 2023 to 2028, Global Market Estimates said in November.
Overseas commitments to buy Taiwan’s consumer electronics, the top export-order category at US$17.45 billion, went up 16.1 per cent last month, compared with a year prior.
Meanwhile, orders for information and communication products lost 19.3 per cent, year on year, and finished the past month at US$13.91 billion.
US orders to Taiwan also edged up by 2.7 per cent last month, according to the ministry data, and the United States led other world markets in January with US$15.39 billion in commitments.
Combined orders from mainland China and Hong Kong expanded by 28 per cent last month, year on year, to US$10.64 billion. Commitments from the 10-country Association of Southeast Asian Nations soared by 117.9 per cent to US$9.08 billion, while European orders to Taiwan shed 50 per cent.
Consumer electronics and their parts head up a tech sector that accounts for about 30 per cent of Taiwan’s economy. The island supplies an estimated 60 per cent of the world’s semiconductor chips, including the most advanced.
Semiconductors, electronics for cars, and electric vehicle components probably led orders last month, along with AI-related gear, Hu said.
Taiwan expects US$7.3 billion in AI investments in 2024, exports expand again
Last month, market research firm Canalys had forecast that the world’s wearable-band market would expand by 10 per cent this year because of an “expected resurgence” in smartwatch interest.
“Taiwan’s exports have done better in recent months thanks to stronger electronics shipments, which have benefited from the boom in artificial intelligence,” said Heron Lim, assistant director and economist at Moody’s Analytics.
But he observed that a longer-term rally in orders could “take time” because of lingering high interest rates around the world. Monetary authorities in many countries raised rates last year to combat inflation.
When rates are high, consumers are less willing to take out loans for major purchases or investments, in turn slowing overall consumption.
“We look for central banks across the world to begin easing monetary policy settings mid-year, which should help demand find better footing,” Lim said.
