The head of Taiwan's largest industry association kicked off the Taitronics trade show yesterday by questioning the falling stock market in light of solid trade figures.
"I don't understand why technology stocks have fallen so much when overall [electronics industry] exports have increased by over 30 percent through August of this year," said Richard Wu (吳思鍾), chairman of the Taiwan Electrical and Electronic Manufacturers' Association (電電公會).
A rise in worldwide demand coupled with increased orders by Japanese firms has propelled the nation to one of its best export years.
The surge in exports is expected to continue through next year with the addition of new product categories like mobile phone gear, Internet appliances and personal digital assistants.
The amount of mobile phones manufactured in Taiwan has already leaped five-fold over last year and strong notebook computer sales have seen record orders as well, with Taiwan expected to account for "55 to 70 percent of world shipments" according to one analyst.
"But even though notebook sales should hit record levels, margins on those products are low, so profits will be very low," explained Henry Wang, (王漢寧), electronics analyst at EnTrust Securities (永昌綜合證券).
According to Wang, investor concern centers on low profit margins and questions about the future of Taiwan's "traditional" high-tech products like motherboards, monitors and PC components.
Manufacturers of these products have spent the year cutting back on production costs or moving facilities to China instead of developing stronger product R&D or marketing under their own brand names.
Due to the small size of many of Taiwan's electronics firms and their apparent unwillingness to invest in R&D or marketing, the government has set up agencies and trade associations to aid in both areas.
The China External Trade Development Council (
The lack of confidence in Taiwanese companies' ability to move into high value R&D or build brand names coupled with slowing demand from the nation's top markets -- North America and Europe -- has exacerbated the fears of investors already worried about the policies of Taiwan's new government.
After more than half a century of unbroken rule, the KMT handed over the reigns of power to presidential election winner Chen Shui-bian (陳水扁) and the DPP, which has so far failed to build confidence in its ability to manage Taiwan's economy.
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