Gross output from the domestic manufacturing sector took another heavy hit last quarter as it contracted 6.6 percent year-on-year to NT$3.37 trillion (US$111.77 billion), data released yesterday by the Ministry of Economic Affairs showed.
Traditional manufacturing industries were the primary drivers of the sector’s decline, as they continue to face dwindling market demand due to flailing raw material prices, the ministry said.
“Many of our traditional manufacturers are very dependent on overseas sales, which in turn are tied closely to the global economic outlook,” Department of Statistics Director-General Wang Shu-chuan (王淑娟) said by telephone, adding that a US-China trade dispute last year cast a pall over worldwide market demand.
For example, the chemical materials and machinery equipment industries exported about 47 percent and 62 percent respectively of their goods abroad, Wang said, adding that the two industries saw their gross output drop 21.55 percent and 13.49 percent year-on-year last quarter to NT$381.7 billion and NT$161.8 billion.
“And now traditional manufacturers are confronted by a spreading coronavirus [COVID-19] that’s dampening business sentiment,” Wang said.
The base metal industry last quarter declined 15.76 percent in gross output to NT$320.5 billion, but the sector perform better this quarter, as the government plans to launch large construction projects this year, she said.
“We are also betting on the offshore wind industry, which would stimulate market demand for machine equipment, among other products,” Wang said, adding that Taiwanese companies relocating their production to Taiwan would also drive up demand for machinery equipment.
In contrast, the auto and auto parts industries reported that gross output grew 7.73 percent to NT$95.7 billion last quarter, ending eight consecutive quarters of annual declines, which the ministry attributed to healthy sales of small family vehicles ahead of the Lunar New Year holiday and the popularity of newly launched models.
In the tech sector, gross output from the electronics components industry declined 4.14 percent to NT$953.6 billion, dragged down by shrinking market demand for LCD panels and ICs.
The market for LCD panels also remains oversaturated, resulting in price cuts and a decrease in production of flat panels, color filters and other related products, it said.
“However, the computer, electronic goods and optical components industry has seen tremendous growth, and we hope the momentum will continue this quarter, as companies have shown little intention of slowing production,” Wang said.
Those sector’s gross output surged 17.95 percent to NT$214 billion, thanks to production expansion by returning companies.
The ministry maintains an optimistic outlook regarding all of Taiwan’s tech industry, because of the upcoming deployment of 5G technologies and a trend toward using multi-camera lenses in smartphones.
NOT ALL GOOD: Analysts warned that other data for last month might be less rosy due to the virus and analysts expect the PMI to contract again next month Chinese factory activity saw surprise growth last month as businesses went back to work following a lengthy shutdown, but analysts said that the economy faces a challenging recovery as external demand has been devastated by the COVID-19 pandemic, while the World Bank said that growth could screech to a halt. China is slowly returning to life after months of tough restrictions aimed at containing the virus, which put millions of people into virtual house arrest and brought economic activity to a near standstill. The strict measures saw a closely watched gauge of manufacturing plunge to its lowest level on record in February,
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