Factory production and export orders increase

Taiwan's export orders and industrial production rose in February as companies went back to work after closing for the weeklong Lunar New Year holiday, even though US customers scaled back orders.

Overseas orders for Taiwan-made goods rose 8.9 percent from a year earlier to about US$10.7 billion, reversing January's 4.6 percent decline, the Ministry of Economic Affairs said.

Industrial production rose 9.1 percent after dropping 14 percent in January.

The New Year holiday, which fell in late January this year and in early February last year, gave the figures a temporary boost last month.

Stripping out the holiday effect, orders and production probably fell last month as a sharper-than-expected economic slowdown in the US cut sales of computers, chips and mobile phones.

"January and February were very bad for receiving orders," said Janet Chen, project manager at Silicon Investment Co, an affiliate of Silicon Precision Industries Co (矽品精密), Taiwan's second- largest chip packager.

"People don't know where the demand is, so how do they place orders?" she added

For January and February combined, export orders rose 1.8 percent from a year earlier, and industrial production fell 4.25 percent, the ministry said.

Like other Taiwan companies, Silicon Precision relies heavily on overseas buyers, especially in the US. Overseas customers, including Broadcom Corp and Xilinx Inc of the US, make up about half the company's sales.

TSMC's Troubles As shrinking demand for electronic goods cuts overseas orders, the government expects Taiwan's export growth to slow to 5 percent this year from last year's 22 percent.

In the first two months of the year, exports fell 4.4 percent from a year earlier.

Taiwan companies are bracing for a drop in sales. Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world's biggest maker of made- to-order chips, plans to cut spending on expansion by almost a fifth this year as demand from customers such as Motorola Inc and Broadcom Corp falls.

TSMC's chief financial officer, Harvey Chang (張孝威), said today that "things haven't improved" since early February, and profit may not rise this year.

Orders for electronic goods, Taiwan's biggest export item, rose 8.7 percent from a year earlier to US$2.1 billion, less than January's 12 percent gain.

Telecommunications equipment makers saw orders drop 1.4 percent to US$1.9 billion in February, compared with a 14 percent drop the previous month.

Orders from US customers fell 5.5 percent from a year ago to US$3.2 billion, compared with a 4.7 percent drop January.

Japanese orders rose 27.6 percent to US$1.3 billion, after gaining 11.5 percent in December.