China’s official factory gauge started the new year on a robust note, giving policymakers a buffer to transition to neutral policy settings as they prepare for potential trade tensions with US President Donald Trump.
The manufacturing purchasing managers’ index was 51.3 last month, compared with a median estimate of 51.2 in a Bloomberg survey of economists and 51.4 in December.
The nonmanufacturing purchasing managers’ index was at 54.6, versus 54.5 in December.
Numbers greater than 50 indicate improving conditions.
China last year notched a 6.7 percent full-year expansion, with growth quickening to 6.8 percent in the last quarter.
Early private indicators for last month, such as readings based on satellite views, suggest manufacturing remained robust into this year.
The slight pullback from December might have much to do with seasonal effects, as the week-long Lunar New Year holiday typically weighs on the manufacturing reading in January and February.
This year, the holiday started on Friday last week, shutting factories across the nation.
“We believe that the manufacturing sector will continue to underperform the services sector,” analysts at BMI Research, Fitch Group’s research arm, wrote in a note. “Weaker domestic demand and an uncertain external environment due to rising US protectionism will weigh on the former, while services will benefit from continued investment by the government and the private sector.”
“It’s a good number,” Natixis Asia Ltd Hong Kong-based Greater China senior economist Iris Pang said.
She said the performance was most likely driven by new manufacturing sectors, such as industrial robots and “new energy” cars.
At the same time, a reduction of excess capacity in the coal and steel industries is also helping.
“The cleanup of the overcapacity sectors such as coal and steel has been almost completed,” Pang said. “Steel is ongoing, but coal is completed, so the manufacturing data on coal and steel could be positive.”
“Behind the headline is still an out-performance of large enterprises, suggesting that China’s manufacturing industry continues to consolidate,” Australia & New Zealand Banking Group Ltd Hong Kong-based Greater China chief economist Raymond Yeung (楊宇霆) 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