Tue, May 20, 2003 - Page 10 News List

Tech industry woes likely to increase

TRICKLING DOWN With computer sales slumping in China, the high-tech industry here is only just starting to feel the full effects of the outbreak of SARS there

By Bill Heaney  /  STAFF REPORTER

The country's technology industry may be only beginning to feel the impact of SARS on its bottom line, two reports from government-funded research body the Market Intelligence Center (MIC) suggested yesterday.

Retail sales of computers in China are expected to shrink by between 15 and 20 percent in the second and third quarters of this year, which may impact Taiwanese computer manufacturers, one report said yesterday.

In addition, local manufacturers may be unable to land new orders beyond the second quarter because of travel restrictions imposed at home and abroad to limit the spread of the virus, a second MIC report said.

Home computer sales in China slumped by between 40 and 50 percent in late April and early May because of the SARS epidemic, with sales in hardest-hit Beijing falling by up to 85 percent, the report said.

Corporate sales have been less severely hit -- down between 10 and 15 percent. Over the next five months, MIC predicts a 15- to 20-percent drop in total computer sales in China.

More than 30 percent of all exports from Taiwan go to China, according to Ministry of Economic Affairs. Taiwanese businesses have invested more than US$100 billion in factories in China, the majority of which are producing computer and related products.

The second MIC report surveyed 63 companies listed on Taiwan's stock exchange and found that none could forecast orders beyond the end of next month. Tech companies complained that restrictions on inbound and outbound passengers had seriously limited access to new customers and new orders.

However, the report said two factors were creating a false image of an industry in trouble. First, companies have been piling up stock in case a SARS outbreak at their factories halts production and, second, sales are traditionally slower in the second quarter.

The report did not offer any prediction for the industry's performance in the second half of this year.

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