“New orders for both consumer and industrial electronics worldwide continue to contract at a rapid pace,” Neumann said. “Taiwan’s economy is especially exposed to the vagaries of the global electronics sector given its key role in global tech supply chains.”
Orders to Taiwan from mainland China and Hong Kong, one of the island’s biggest buyers by region, fell by 45.9 per cent year on year in January, while orders from the US to Taiwan declined 14.7 per cent, official data showed. Orders from Europe gained 18.3 per cent over the month.
Although China abruptly dropped its Covid controls in December and reopened its borders in January, economic activity – and particularly consumption – is still far from bouncing back, with many analysts expecting a stronger showing in the second half of the year.
US curbs on Chinese purchases of offshore technology, part of a wider dispute between Beijing and Washington, have also kept orders in check, said Kent Chong, a partner with the professional services firm PwC in Taipei.
Commitments to buy Taiwan’s consumer electronics, the top export order category by value at US$15.03 billion last month, lost 21.8 per cent year on year in January.
“The end customers are slowing on their orders, particularly in their export sector,” Chong said. “That applies to most of the premium customers. We will not expect to see that fig look good any time soon.”
Manufacturing output in Taiwan fell for the first time in eight quarters in the final three months of 2022, contracting 4 per cent compared to a year earlier, Taiwan’s Ministry of Economic Affairs said on Saturday. Output from October to December last year was US$136 billion.
The ministry said inflation and interest rate increases by major world economies had weakened global demand. Traditional industries such as machinery and basic metals showed the most severe contractions in the most recent quarter, the ministry said.
Taiwan supplies around 60 per cent of the world’s semiconductors, including the most advanced. Technology contributes around 30 per cent to Taiwan’s gross domestic product.
Orders for basic metals last month fell 45.4 per cent and commitments for Taiwan-made machinery declined 38.4 per cent.
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China condemns new US law aimed at boosting domestic semiconductor manufacturing
Taiwan’s Ministry of Labour said last Thursday that the number of workers officially on furlough had risen by 1,403 from a week earlier, largely in manufacturing and owing to a slump on world demand. The total number of jobs on furlough was 16,495, the ministry said.
An additional 65 employers mobilised unpaid leave programmes last week, bringing the total number to 2,315 as of February 15, data showed.
The job market for university graduates is already tough this year, students in Taipei told the Post in January.
Slowing demand in Taiwan’s major export markets became obvious in October and sustained through January, said Tony Phoo, an economist with Standard Chartered Bank in Taipei.
“In the coming months, both new export orders for Taiwanese producers, as well as semiconductor output, are likely to continue to fall, with stabilisation only setting in over the summer months,” Neumann added.
