The official Purchasing Managers’ Index (PMI) declined to 49.2 last month from 51.5 in October, as manufacturers saw a slowdown in business amid a lackluster global economy, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said.
It is the first contraction since December 2012, with almost all subindices falling below the neutral threshold as inventory-building demand linked to Apple Inc’s new handsets softened, CIER president Wu Chung-shu (吳中書) told a news conference.
“The latest PMI value suggests a slowdown in the domestic economy, instead of a downturn due to a lack of seasonal adjustment,” Wu said.
Disappointing economic performance in Europe, China and Japan accounted for the slack growth momentum, although the US performed above par, the economist said.
The monthly PMI survey is used to gauge the health of the nation’s manufacturing industry, with scores above 50 indicating expansion and values below that mark suggesting contraction.
Manufacturers in electronic, chemical, optical and biotechnology sectors all slipped into contraction after orders linked to the popular iPhone 6 smartphone series peaked in the first half of the year, Wu said.
The subindex on new orders eased to 47 last month, from 50.3 in October, while the subindex on exports slid from 50.2 to 47.2, the survey found.
However, food makers and machinery suppliers reported growing business last month, due to the advent of the high season for the former and a sustained, global competitive edge for the latter, Wu said.
The subindices on employment and inventories remained in expansion territory at 50.1 and 51.7 respectively last month, reflecting firms’ cautious optimism for their business outlooks, CIER researcher Chen Shin-hui (陳馨蕙) said.
The business slowdown might last for a while, but could resume trending up early next year, as Apple’s rivals launch new devices, Supply Management Institute Taiwan executive director Steve Lai (賴樹鑫) said.
“Some handset suppliers have avoided launches of new devices this year for fear of being upstaged by the iPhone 6,” Lai said.
The Lunar New Year holiday in February next year could also lend support to businesses, he added.
The traditional concept of seasonality is losing relevance in capturing business pulses among technology firms, while the introduction of new devices gains increasing importance, Lai said.
British banking group HSBC PLC reached similar findings, with its HSBC Taiwan Manufacturing PMI showing 51.4 last month, down from 52 in October and the slowest rate of growth in 15 months.
“The current slowdown in growth momentum, which started in the third quarter, has deepened this quarter,” HSBC economist in Asia John Zhu (朱日平) said.
The slight increase in hiring and fall in input prices might not provide much respite in the short run, Zhu said.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to