Yuanta-Polaris Research Institute (元大寶華綜經院) yesterday slashed its economic growth forecast for the nation to 1.42 percent for this year, from the 1.93 percent it projected three months earlier, as a worsening global slowdown and manufacturing outsourcing hit the nation’s export-reliant economy.
“Weaker-than-expected exports and private investment warrant a downward revision and downside risks remain amid a shaky global recovery inflated by monetary easing,” Yuanta-Polaris Research Institute chairman Liang Kuo-yuan (梁國源) said at a press conference in Taipei.
Yuanta-Polaris’ forecast is the lowest among several domestic research institutes and is also lower than the 1.47 percent growth estimate made last month by the Directorate-General of Budget, Accounting and Statistics (DGBAS).
Exports, which drive 70 percent of the nation’s GDP, is now expected to contract by 0.32 percent this year, from the previous estimate of a 2.02 percent expansion, as the world shows flagging interest in existing technological hardware devices due to a lack of innovative features, the Taipei-based think tank said.
Taiwan is home to major contract makers of Apple Inc’s iPhone and iPad, as well as other brandnames’ laptops and related electronic components.
Imports could fall 0.42 percent annually this year, rather than a 2 percent pickup as previously estimated, Liang said.
The shifting taste for technology consumption is set to weigh on private investment, which is likely to expand at a slower pace of 1.69 percent this year, from a growth of 2.36 percent projected three months earlier, the Yuanta-Polaris report said.
The increasing outsourcing of manufacturing activity to China and other countries is unfavorable for Taiwan’s research and development spending, which in turn affects job creation and wages at home, Liang said.
“This is why domestic wages have stagnated over the years, despite a noticeable increase in industrial output,” he said.
The incoming government should tap people with technology and science backgrounds to head the Ministry of Economic Affairs as well as other industrial departments to facilitate structural reform, he added.
While monetary easing is no panacea to economic ills, as evidenced by the sustained languid economy in Japan, Europe and elsewhere where central bankers are increasingly running out of policy tools, Liang said he expects Taiwan’s central bank to cut interest rates by between 12.5 and 25 basis points today to support growth despite its limited effect.
“It is not a matter of whether the central bank should cut interest rates, but by how much to help the economy turn around,” he 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