Thu, Oct 26, 2017 - Page 12 News List

Manufacturing growth to slow next year: analyst

HEALTHY YEAR:Analysts predict that the LCD panel industry will see revenue growth next year, and Innolux has relaunched its TV assembly line to keep pace

By Lisa Wang  /  Staff reporter

The manufacturing sector’s growth is expected to be moderate next year as adoption of new devices, such as Apple Inc’s new iPhone series, could dampen steady electronics demand, the Industrial Economics and Knowledge Center (IEK, 產業經濟與趨勢研究中心) said yesterday.

The nation’s manufacturing sector is expected to see its revenue grow at an annual rate of 3.25 percent to NT$18.15 trillion (US$599.7 billion) next year, decelerating from 4.04 percent year-on-year growth this year, IEK said.

That would mark a second consecutive year of growth for the manufacturing sector.

The information and communications technology sector, the biggest contributor to the nation’s manufacturing industry, is expected to grow 3.96 percent year-on-year to NT$6.47 trillion next year, compared with a 4.02 percent annual expansion this year.

“The global economy is expected to extend last year’s growth in 2018, which will help spur demand for laptops, tablets, LCD TVs and smartphones,” IEK policy and regional research division deputy director Peter Cheng (陳志強) told a media briefing.

“However, we are closely monitoring whether slower adoption of new-generation electronic devices will weaken the manufacturing sector’s strength in the first quarter [of next year], given weaker-than-expected iPhone 8 sales and uncertainty over shipments of the iPhone X,” he said.

The nation’s major wireless service providers, including Chunghwa Telecom Co (中華電信), yesterday said that the iPhone X would be made available to local consumers from Friday next week.

The center yesterday also projected that local LCD panel makers would see annual revenue growth of between minus-1.7 percent and 1 percent to about NT$907 billion next year, after hitting a peak this year.

“We believe next year will be a healthy year for the LCD industry,” IEK analyst James Lin (林澤民) said during the media briefing. “Recent price corrections should be caused by excessive inventory digestion, rather than by supply-demand imbalance. We do not expect oversupply will be an issue next year.”

Lin’s optimism is built on his assumption that Chinese LCD panel makers, such as BOE Technology Group (京東方), are to ramp up production at new 10.5-generation factories only in the second quarter of next year, and it would take about two quarters to see significant increase in capacity from Chinese factories before their yield rate improves.

To secure its revenue and profit growth momentum, Innolux Corp (群創), the world’s No. 3 LCD panel maker, resumed its TV assembly business this year and is seeking capacity expansion in Southeast Asia, Innolux technology development division general director Yang Chiu-lien (楊秋蓮) said.

“LCD companies are adjusting their business models to cope with the changing LCD industry. Innolux’s TV assembly business can help underpin the company’s revenue and profit growth when panel prices go down,” Yang said.

Among the four major manufacturing sectors, the petrochemical sector is likely to grow at the fastest pace of 4.13 percent annually to NT$4.57 trillion next year, benefiting from slower capacity expansion globally and an uptick in global crude oil prices to US$51.6 per barrel.

The basic metal and machinery sector, another pillar of the local manufacturing industry, is expected to grow 2.18 percent to NT$4.86 trillion next year, as substantial cuts in steel capacity from China helps ease a supply glut, Cheng said.

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