MACROECONOMICS
GDP forecast update
The Directorate-General of Budget, Accounting and Statistics (DGBAS) is likely to cut Taiwan’s GDP growth forecast for this year to around 2.68 percent, following a disappointing 0.64 percent annual growth for the second quarter, sources said yesterday. The expected downgrade will reflect weakening global demand at a time when several major economies, including China, show signs of a slowdown, the sources said. Under such unfavorable circumstances, the DGBAS could cut its forecast from an estimate of a 3.28 percent increase the agency made in May. The agency is scheduled to update its GDP growth forecast today.
STOCK MARKET
UBS cuts year-end target
UBS Securities Ltd has lowered its year-end TAIEX target forecast to 8,550 points from 9,200, its fourth cut in over two months. The benchmark index closed up 28.36 points, or 0.34 percent, at 8,311.74 yesterday.
“We believe one of the key drags on the market is a lack of fundamental support. In particular, weakness in end-demand from emerging markets, including China, continues to serve as a major headwind for Taiwan tech,” William Dong (董成康), equities and research head of UBS Securities’ Taipei branch, wrote in a client note.
“For non-tech sectors, including bicycles, tires and materials, slow conditions in China continue to be a challenge,” he said.
COMPUTERS
Wistron drops Q2 margin
Contract notebook computer maker Wistron Corp (緯創) yesterday reported a worse-than-expected operating margin of 0.013 percent for the second quarter, down from 0.54 percent in the first quarter, citing a scale back of operations capacity utilization. “The decreased margin was primarily due to continued model transition in smart devices, a cutback in operations and capacity utilization, weak PC momentum and a one-time employee bonus expense of NT$350 million (US$10.8 million) that was booked in the second quarter,” Wistron said in a statement. In the second quarter, the company’s operating income was NT$19 million, down from NT$817 million in the previous quarter.
REAL ESTATE
Taipei price comparison
Housing prices in Taipei have increased more than fivefold over the past 27 years, according to a report released by the Chinese-language MyHousing magazine. To purchase a 150m2 apartment, a double-income family would have to spend the entire salary of both partners for 45 years, the report said. According to the report, the average monthly salary in Taiwan in May this year was NT$37,489, an increase of 18.3 percent over the average NT$31,690 in 1988. However, housing prices in Taipei today are more than five times higher than those of 1988, it said.
TEXTILES
Makalot sets income record
Makalot Industrial Co (聚陽), a textile supplier for global apparel retailers such as Zara, yesterday said pretax income for the first seven months of the year rose 29.97 percent year-on-year to NT$1.55 billion, or NT$7.8 per share, the highest in the company’s history. Jih Sun Securities Investment Consulting Co (日盛投顧) forecast that Makalot would see an even stronger second half boost to its annual net income, growing 27.98 percent to NT$2.18 billion from last year, with revenue rising 13.57 percent to NT$23.72 billion, thanks to expanded capacity and increasing orders.
AI SPLURGE: The four major US tech companies have lost more than US$950 billion in value since releasing earnings and outlooks, while equipment makers were gaining Four of the biggest US technology companies together have forecast capital expenditures that would reach about US$650 billion this year — a flood of cash earmarked for new data centers and all the gear within them. The spending planned by Alphabet Inc, Amazon.com Inc, Meta Platforms Inc and Microsoft Corp, all in pursuit of dominance in the still-nascent market for artificial intelligence (AI) tools, is a boom without a parallel this century. Each of the companies’ estimates for this year is expected either near or surpass their budgets for the past three years combined. They would set a high-watermark for capital spending
China’s top chipmaker has warned that breakaway spending on artificial intelligence (AI) chips is bringing forward years of future demand, raising the risk that some data centers could sit idle. “Companies would love to build 10 years’ worth of data center capacity within one or two years,” Semiconductor Manufacturing International Corp (SMIC, 中芯) cochief executive officer Zhao Haijun (趙海軍) said yesterday on a call with analysts. “As for what exactly these data centers will do, that hasn’t been fully thought through.” Moody’s Ratings projects that AI-related infrastructure investment would exceed US$3 trillion over the next five years, as developers pour eye-watering sums
Bank of America Corp nearly doubled its forecast for the nation’s economic growth this year, adding to a slew of upgrades even after a rip-roaring last year propelled by demand for artificial intelligence (AI). The firm lifted its projection to 8 percent from 4.5 percent on “relentless global demand” for the hardware that Taiwanese companies make, according to a note dated yesterday by analysts including Xiaoqing Pi (皮曉青). Taiwan’s GDP expanded 8.63 percent last year, the fastest pace since 2010. The increase “reflects our sustained optimism over Taiwan’s technology driven expansion and is reinforced by several recent developments,” including a more stable currency,
COLLABORATION: Taiwan and the US could jointly find solutions to weaknesses in supply chain resilience for critical materials, focusing on mining and initial refinement Taiwan is likely to purchase rare earths from the US in the future, and is also in talks with Australia and Canada to strengthen global rare earth supply chain security, Minister of Economic Affairs Kung Ming-hsin (龔明鑫) said yesterday. Taiwan and the US last month concluded the sixth Economic Prosperity Partnership Dialogue, during which both sides signed a joint statement endorsing the principles of the Pax Silica Declaration, pledging to deepen cooperation in areas including critical minerals. At the time, Kung said the two sides would establish working groups to advance cooperation in areas including artificial intelligence, digital infrastructure, critical materials and
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