The development of the manufacturing sector remains a key factor to economic growth, but the excessive concentration of sector profitability on certain large-cap companies creates the largest uncertainty for the sector, China Credit Information Service Ltd (CCIS, 中華徵信所) said yesterday.
The Taipei-based credit rating firm made the remarks after releasing its latest survey on the nation’s top 5,000 business groups, which saw net sales last year total NT$35.79 trillion (US$1.16 trillion), with net income breaking the NT$2.5 trillion mark, both marking new record highs.
The manufacturing sector led the rebound, with companies posting NT$20.93 trillion in net sales and NT$1.23 trillion in net income, both accounting for more than half of the levels generated by business groups in the service and financial sectors, the survey showed.
Hon Hai Precision Industry Co (鴻海精密), the world’s largest contract electronics maker, was the nation’s largest enterprise in terms of net sales, with NT$3.4 trillion recorded last year.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) was the nation’s most profitable company for the 11th consecutive year, with NT$263.9 billion in net profit.
CCIS president David Chang (張大為) said that historical data show that the manufacturing sector has always accounted for more than half of the net sales and earnings of the nation’s top 5,000 businesses, adding that the sector would remain a cornerstone of the nation’s economy.
However, profitability is overconcentrated on certain large-cap players, with the three most profitable Taiwanese manufacturers — TSMC, Hon Hai and Inotera Memories Inc (華亞科技) — generating a total of NT$495.8 billion in pre-tax profits last year, accounting for 40.46 percent of the combined earnings of all manufacturers in the top 5,000 list.
With market competition intensifying, “Taiwan’s manufacturing sector is facing an M-shaped trend,” Chang said.
Chang said the nation’s financial industry is on its way to joining regional market expansion in Asia, with private players outrunning their state-owned counterparts.
The financial industry might see significant progress either in assets, net sales or profits, he added.
Cathay Financial Holding Co (國泰金控) became the nation’s top financial services provider in terms of assets last year, with total assets of NT$6.95 trillion, beating Chunghwa Post Co Ltd (中華郵政) for the first time in history, the survey’s data showed.
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