Taiwanese electronics companies should benefit from a weaker yen, as many of them import key components from Japan, an executive from the Japanese Chamber of Commerce and Industry in Taipei said yesterday.
The Japanese currency dropped near a seven-year low of ￥114.5 per US dollar yesterday after the Bank of Japan unexpectedly said on Friday last week that it was expanding its monetary easing policy to combat deflation.
“The yen may pull back a bit after the dramatic depreciation, but I believe the currency will remain weak in the long term,” Isao Takeuchi, a senior director of the business association, told a media briefing.
Photo: CNA
Takeuchi is also the general manager of Mizuho Bank Ltd’s Taipei branch.
Japanese manufacturers with operations in Taiwan might not benefit much because they have diverse production bases at home and abroad, Takeuchi said.
However, for Taiwan, it will be a different story, he said.
“As most Taiwanese electronics companies, especially those in the information technology industry, purchase key components from Japan, the yen’s significant decline will help them reduce component sourcing costs,” Takeuchi said.
Taiwan’s LCD and semiconductor industries are two of the biggest importers of chemical materials and equipment from Japan, data from the Industrial Development Bureau show.
In addition, Taiwanese foundry and DRAM firms, as well as suppliers of components used in machine tools and bicycles, might indirectly get a boost in orders from their Japanese clients as the weaker yen makes Japanese brands more price competitive, the bureau said.
However, the yen’s depreciation might negatively impact certain Taiwanese firms, the bureau said.
Bicycle and machinery tool manufacturers could bear the brunt of stronger pricing competition from their Japanese counterparts, it said.
The Japanese business association, which represents 450 Japanese firms in Taiwan, also delivered an annual white paper to the National Development Council.
The government should accelerate negotiations with Japan to ink an economic partnership agreement — which is similar to a free-trade pact — to deepen trade ties between the countries, the white paper said.
It also urged Taiwan to reduce its economic reliance on China and to explore new business opportunities outside the world’s No. 2 economy, such as emerging countries in Southeast Asia, chamber chairman Hiroshi Ishizuka said.
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