Industrial production dropped 3.65 percent annually last month, representing the smallest annual decline in the past seven months, supported mainly by rising output of stainless steel and chemical products, the Ministry of Economic Affairs said yesterday.
“The size of the annual contraction could have been smaller if the production of some electronics manufacturers were not affected by the earthquake last month,” the ministry’s Department of Statistics Deputy Director-General Yang Kuei-hsien (楊貴顯) told a press conference.
Last month’s result also marked the 10th consecutive month of annual declines, ministry data showed.
The manufacturing sector, which contributed more than 90 percent of total industrial output, contracted 4.65 percent last month from a year earlier, the data showed.
QUAKE IMPACT
Yang said the electronics component industry, which is the pillar of the nation’s manufacturing sector, saw a 7.01 percent annual decline in production last month.
He attributed the drop to the impact of the Feb. 6 earthquake, which killed 117 people and injured more than 500 in Tainan, as well as a higher comparison base last year.
Production of machinery and equipment plunged 12.4 percent year-on-year last month on weak global demand and intensified international competition.
“The production of machine tools, linear guideways and ball screws continued to drop from a year ago,” Yang said.
The chemical and basic metal industries were the bright spots last month, with output growing from a year earlier, data showed.
“Fueled by rising global crude oil prices and restocking demand, chemical output climbed 2.06 percent annually last month,” Yang said.
The production of basic metals swung back into positive territory, growing 2.61 percent annually last month, as the average selling price of stainless steel recovered and demand for inventory replenishment rose, he said.
Given a higher comparison base last year, the ministry expects industrial production for this month to drop by between 5 percent and 8 percent.
“Overall, industrial production for this quarter is expected to decline from a year ago, but it is likely to hit the bottom this quarter and could start to grow on an annual basis in May,” Yang said.
Moody’s Analytics economist Emily Dabbs said in a note that the slowdown in China would weigh on Taiwan’s manufacturing sector through most of the year.
COMMERCIAL TRADE
In a separate release, the ministry said that the nation’s commercial trade reported total revenues of NT$981.4 billion (US$30.08 billion) last month, down 6.96 percent from NT$1.05 trillion a year earlier.
The decline was mostly due to the wholesale sector, which dropped 11 percent to NT$611.3 billion from a year earlier owing to lower orders for notebook computers and televisions from Japan, as well as weak demand for machinery, Yang said.
Revenue from the retail and restaurant sectors increased 0.1 percent and 3.4 percent to NT$330.3 billion and NT$39.8 billion respectively last month, both record highs, Yang said.
The ministry forecast that the retail and restaurant sectors would grow by between 2 percent and 4 percent annually this month, while the wholesale sector would fall by 8 percent.
Three experts in the high technology industry have said that US President Donald Trump’s pledge to impose higher tariffs on Taiwanese semiconductors is part of an effort to force Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to the negotiating table. In a speech to Republicans on Jan. 27, Trump said he intends to impose tariffs on Taiwan to bring chip production to the US. “The incentive is going to be they’re not going to want to pay a 25, 50 or even a 100 percent tax,” he said. Darson Chiu (邱達生), an economics professor at Taichung-based Tunghai University and director-general of
‘LEGACY CHIPS’: Chinese companies have dramatically increased mature chip production capacity, but the West’s drive for secure supply chains offers a lifeline for Taiwan When Powerchip Technology Corp (力晶科技) entered a deal with the eastern Chinese city of Hefei in 2015 to set up a new chip foundry, it hoped the move would help provide better access to the promising Chinese market. However, nine years later, that Chinese foundry, Nexchip Semiconductor Corp (合晶集成), has become one of its biggest rivals in the legacy chip space, leveraging steep discounts after Beijing’s localization call forced Powerchip to give up the once-lucrative business making integrated circuits for Chinese flat panels. Nexchip is among Chinese foundries quickly winning market share in the crucial US$56.3 billion industry of so-called legacy
Hon Hai Precision Industry Co (鴻海精密) is reportedly making another pass at Nissan Motor Co, as the Japanese automaker's tie-up with Honda Motor Co falls apart. Nissan shares rose as much as 6 percent after Taiwan’s Central News Agency reported that Hon Hai chairman Young Liu (劉揚偉) instructed former Nissan executive Jun Seki to connect with French carmaker Renault SA, which holds about 36 percent of Nissan’s stock. Hon Hai, the Taiwanese iPhone-maker also known as Foxconn Technology Group (富士康科技集團), was exploring an investment or buyout of Nissan last year, but backed off in December after the Japanese carmaker penned a deal
WASHINGTON POLICY: Tariffs of 10 percent or more and other new costs are tipped to hit shipments of small parcels, cutting export growth by 1.3 percentage points The decision by US President Donald Trump to ban Chinese companies from using a US tariff loophole would hit tens of billions of dollars of trade and reduce China’s economic growth this year, according to new estimates by economists at Nomura Holdings Inc. According to Nomura’s estimates, last year companies such as Shein (希音) and PDD Holdings Inc’s (拼多多控股) Temu shipped US$46 billion of small parcels to the US to take advantage of the rule that allows items with a declared value under US$800 to enter the US tariff-free. Tariffs of 10 percent or more and other new costs would slash such