Fitch Ratings, an international rating agency, affirmed yesterday its A+ sovereign rating for Taiwan and its AA rating for the local currency, citing a positive outcome of the legislative elections with regard to maintaining the cross-strait status quo.
Although retaining a stable outlook for Taiwan -- the same view it held before Saturday's legislative elections -- Fitch Ratings expressed concern over a legislative stalemate on fiscal reform.
The legislative elections saw the pro-independence pan-green camp led by President Chen Shui-bian (
"The electoral results also imply a continued legislative stalemate on any new fiscal reform, including potential tax and entitlement reform," Fitch Ratings said in a statement yesterday. "As a result, Taiwan's public indebtedness of 36.2 percent of GDP at the end of 2003 could rise above 40 percent of GDP by 2006."
Fitch Ratings, which incorporates political and cross-strait risk into its sovereign rating for Taiwan, also said the election outcome has created a political setting that is unlikely to favor the controversial NT$610.8 billion military procurement budget.
Still, the agency warned of increased pressure on the local currency rating over the long run in the face of rising public indebtedness. This takes into account the recent approval of a special NT$500 billion budget for public infrastructure projects over the next five years, as well as an apparent lack of urgency by policymakers to exercise fiscal consolidation.
Another international ratings agency, Standard & Poor's (S&P), said it will maintain a negative outlook for Taiwan for the time being, given that no positive outcome is expected for the nation's fiscal reform in the short term.
Philippe Sachs, S&P's credit analyst, said he doesn't expect Taiwan to achieve a fiscal balance by 2010, a Chinese-language newspaper quoted him as saying yesterday.
On Nov. 30, before the legislative elections, S&P downgraded Taiwan's outlook to negative from stable, citing the nation's weakening fiscal flexibility and rising tensions with China.
Sachs said the negative outlook also reflects the Taiwanese population's gradual shift away from unification with China over the past four years, which does not bode well for cross-strait relations.
JPMorgan Chase Bank yesterday also said the outcome of Saturday's elections would help ease the risk premium not only for the Taiwan market, but for the Greater China region as a whole.
"In short, the election was a significantly positive event for the Greater China markets," said Grace Ng (吳向紅), an economist for JP Morgan Asia Economic Research.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has appointed Rose Castanares, executive vice president of TSMC Arizona, as president of the subsidiary, which is responsible for carrying out massive investments by the Taiwanese tech giant in the US state, the company said in a statement yesterday. Castanares will succeed Brian Harrison as president of the Arizona subsidiary on Oct. 1 after the incumbent president steps down from the position with a transfer to the Arizona CEO office to serve as an advisor to TSMC Arizona’s chairman, the statement said. According to TSMC, Harrison is scheduled to retire on Dec. 31. Castanares joined TSMC in
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
FACTORY SHIFT: While Taiwan produces most of the world’s AI servers, firms are under pressure to move manufacturing amid geopolitical tensions Lenovo Group Ltd (聯想) started building artificial intelligence (AI) servers in India’s south, the latest boon for the rapidly growing country’s push to become a high-tech powerhouse. The company yesterday said it has started making the large, powerful computers in Pondicherry, southeastern India, moving beyond products such as laptops and smartphones. The Chinese company would also build out its facilities in the Bangalore region, including a research lab with a focus on AI. Lenovo’s plans mark another win for Indian Prime Minister Narendra Modi, who tries to attract more technology investment into the country. While India’s tense relationship with China has suffered setbacks