Tue, Jan 08, 2019 - Page 12 News List

Exports fall 3% amid weaker chip sales

NO RELIEF IN SIGHT:A 9.9 percent fall in shipments of electronic components showed the weakening demand for smartphones, the Department of Statistics director-general said

By Crystal Hsu  /  Staff reporter

Exports last month declined 3 percent to US$28.61 billion from a year earlier as demand for chips used in smartphones softened, the Ministry of Finance said yesterday, adding that relief was not expected in the short term amid US-China trade tensions.

Global technology titans have cut inventory and halted investment, an ominous sign for Taiwan’s export-reliant economy, the ministry said.

“Replacement demand for the newest-generation smartphones was weaker than expected as shown by a 9.9 percent drop in the shipment of electronic components,” Department of Statistics Director-General Beatrice Tsai (蔡美娜) said, adding that a lack of major feature innovations also contributed to lackluster smartphone sales.

Information and technology shipments accounted for about half of overall exports, but Taiwan’s deep participation in the global supply chain makes the nation vulnerable to the lingering US-China trade spat, with the double-digit percentage gain in exports seen in the first half of last year shrinking to a 0.1 percent increase in the fourth quarter, Tsai said.

The statistics agency might need to trim its growth forecast for last year and this year, as exports and imports came in below expectations.

Imports last month increased only 2.2 percent to US$23.89 billion, with local semiconductor companies’ conservative capital equipment purchases bound to weigh on the performance of private investments, the ministry report said.

Capital equipment purchases contracted 6.3 percent last quarter, increasing only 2 percent for the whole of last year, the report said.

The slowdown in electronics shipments is spreading to non-technology sectors, such as chemical, plastic and base metal products, it added.

Mineral exports bucked the trend with a 14.6 percent increase thanks to South Korea’s decision to diversify oil product suppliers, a strategy that benefited Taiwan, Tsai said.

Exports to China, Taiwan’s largest trade partner, fell 9.9 percent to US$11.54 billion last year, while shipments to the US, Europe and Japan stayed in positive territory, in line with the relatively strong fundamentals of those economies compared with emerging economies, Tsai said.

The ministry said it holds a weak outlook of trade activity moving forward, adding that exports could decline 2.5 percent this month, although companies might frontload shipments to avoid disruptions during the Lunar New Year holiday.

However, next month would include more working days than last year, it added.

“Deterioration in global demand, the slowdown in the electronics cycle and the decline in commodity prices have weighed on the value and volume of exports,” DBS Bank Ltd economist Nathan Chow (周洪禮) said in a note.

Given that the electronics sector is entering a slow season in the first half of the year and adverse effects of the US-China trade spat are bound to surface, additional downside risks to trade numbers need to be closely monitored over the next several months, he said.

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