Global demand for new smartphone models is driving Taiwan’s trade surplus and corporate revenues to record highs, underlining the strength of Asian trade even in the face of geopolitical jitters and rumors of protectionism.
As a result, Taiwanese companies are posting record sales, a development they owe largely to an upswing in the global electronics industry.
As Apple Inc and Samsung Electronics Co plan new smartphone models, that in turn is propelling demand for components such as semiconductors made not just in Taiwan, but also South Korea, China, Singapore and Malaysia — lifting exports across the region.
Exports account for about two-thirds of Taiwan’s economy, and machinery and electronics make up the bulk of those exports.
The global semiconductor market is estimated to grow by 11.5 percent to US$378 billion this year, the fastest pace since 2010, a report by World Semiconductor Trade Statistics said.
“The launches of the new Samsung S8 and Apple iPhone 8 smartphone models in 2017 is one of the key drivers of stronger demand for semiconductors,” IHS Markit Asia-Pacific chief economist Rajiv Biswas said. “The upturn in Taiwanese exports is a leading indicator of global electronics demand.”
Taiwan’s trade surplus rose to a record high US$5.83 billion last month, driven by a boost in demand for chips.
Combined revenues from all listed companies rose 4.8 percent to NT$2.65 trillion (US$86.91 billion) last month, a record for the month, sales in the first half of the year rose 4.2 percent to NT$14.87 trillion, also a new high, Taiwan Stock Exchange data showed.
That should help revive growth after output in the first three months of the year cooled from a strong pace in the fourth quarter of 2016. Economists at DBS bank are tipping growth of 2.5 percent this year.
Taiwan’s economy rose 2.6 percent in the January to March quarter, expanding for a fourth straight quarter after the nation fell into recession during late 2015 and early last year. Exports are growing despite the New Taiwan dollar’s 5.6 percent gains this year, the best-performing Asia currency tracked by Bloomberg.
It rose 0.43 percent to NT$30.461 against the US dollar at midday yesterday.
The better performance also comes amid simmering political tensions with China. Beijing has refused all official contact with President Tsai Ing-wen (蔡英文) and protested US President Donald Trump’s proposal to sell US$1.3 billion in arms to Taiwan.
About 40 percent of the export powerhouse’s shipments go to China as it plays a vital role in supplying widgets for China’s manufacturing machine. That also means trade tensions between the US and China could also hurt.
Policymakers are conscious of the ongoing trade and political risks and are attempting to diversify exports into regions such as Southeast Asia by opening new trade offices and boosting tourism.
That is a smart tactic considering the nation’s status as a bellwether of global supply chains whose economy is at the mercy of global cross currents, said Raymond Yeung (楊宇霆), greater China chief economist at Australia & New Zealand Banking Group Ltd in Hong Kong.
“It is this reason that when the big countries sneeze, Taiwan will catch a cold,” he said.
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