Electronics drag on manufacturing output

FAVORABLE WINDS::Shen Jong-chin was optimistic due to the more than NT$288.4 billion invested by returning firms and the advancement of wind farm installations

By Natasha Li  /  Staff reporter

Sat, May 18, 2019 - Page 12

Manufacturing output in the first quarter declined 4.95 percent year-on-year, putting an end to nine consecutive quarters of gains, as the electronics sector weakened, the Ministry of Economic Affairs said yesterday.

Overall production value of local manufacturers totaled NT$3.16 trillion (US$100.97 billion), compared with NT$3.32 trillion a year earlier, the ministry said.

The soft performance of vendors of electronic components underpinned the retreat, it said.

Taiwan is home to the world’s largest contract makers of electronic components used in mobile devices and laptops.

However, almost all sectors saw an output decline, with suppliers of computers, electronic and optical products being the exception, the ministry said.

Sluggish smartphone sales and cooling interest in cryptocurrency mining contributed to an annual decline of 9.08 percent in the electronic components sector, which saw output decline to NT$819.1 billion, it said.

The computers, electronic and optical products sector reported output of NT$164.6 billion, an annual increase of 18.23 percent and the highest quarterly figure since the fourth quarter of 2011, the ministry said.

The increase was mainly due to strong demand for high-performance camera lenses used in communications equipment and because mobile device and server manufacturers expanded capacity, it said.

The improvement also had to do with companies moving their production lines home from China to avoid punitive tariffs imposed by Washington on Chinese goods, the ministry added.

Makers of raw chemical materials, machinery equipment and those in the basic metal sectors took a hit from the US-China trade spat and global protectionist policies on steel trade, with output declining 10.9 percent, 6.86 percent and 2.63 percent respectively, the ministry said.

Output fell 9.2 percent for the automobile and auto parts sector as imported vehicles snapped up market share from local suppliers and foreign demand remained poor, it said.

The ministry expects the production value of local manufacturers to improve this quarter, although output growth could remain negative due to tepid demand for smartphones and display panels

New technologies in the Internet of Things, high-performance computing and automotive electronics sectors might boost sales of electronic components, the ministry said, adding that the non-tech sectors might see output growth stall until trade talks between the US and China are over.

Minister of Economic Affairs Shen Jong-chin (沈榮津) said that he is guardedly optimistic about local manufacturers' output outlook, as 55 Taiwanese companies have pledged to invest more than NT$288.4 billion in the nation.

“[Those] Taiwanese companies would make up for the decline,” he added.

More investment would lift the overall domestic demand this year, Shen said, adding that the manufacturing sector would improve as renewable energy developers move on to the next phase of wind farm installations.