Demand for plant construction is likely to be sustained for years, and is expected to benefit building material and construction companies, as well as some financial firms, Yuanta Securities Investment Consulting Co (元大投顧) said.
There has been stable growth in construction loans, as purchases of land and commercial buildings have been robust since last year.
Based on data released by the central bank on Oct. 26, construction loans grew for an 18th straight month in September to a record NT$2.323 trillion (US$80.4 billion), and rose 16.09 percent from NT$2.001 trillion a year earlier.
PROOF OF DEMAND
The annual growth in construction loans in September was higher than the annual increase of 7.65 percent in housing loans for the same month and an indication of solid demand for plant construction, Yuanta analyst Lisa Chen (陳玫芬) said in a note on Thursday.
“The phase one and phase two construction projects in the Southern Taiwan Science Park (南部科學園區) have taken up 95 percent of the park’s land, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) accounting for more than 50 percent of that and more new construction projects planned in the next five years,” Chen said.
To rapidly expand its capacity, TSMC this year has spent nearly NT$10.01 billion purchasing manufacturing facilities in Tainan from E-Ton Solar Co (益通光能), Optimax Technology Corp (力特光電), Gudeng Precision Industrial Co (家登) and HannStar Corp (瀚宇彩晶), the company has said in regulatory filings.
As semiconductor plants in the science park have reached a significant scale, Dutch semiconductor equipment maker ASML Holding NV has set up an office there with 2,800 employees, Chen said.
The park has obtained government approval to launch its phase three expansion project, in which it plans to acquire 92 hectares of land by 2023 to cope with the boom in plant construction and demand from returning Taiwanese businesses, she added.
“As these projects are for Taiwanese companies, they are driving demand for construction materials, as well as benefiting employment and housing demand in southern Taiwan. Relocation of plants back to Taiwan from China will continue to boost construction material demand even after 2021,” she said.
Construction material suppliers and construction companies, including Goldsun Building Materials Co (國產建材實業), Tung Ho Steel Enterprise Corp (東和鋼鐵), Universal Cement Corp (環球水泥) and Da Cin Construction Co (達欣工程), would likely benefit from the demand for plant construction, Yuanta said.
Goldsun leads Taiwan’s ready-mixed concrete market with a market share of 17 percent; Tung Ho is the nation’s leading rebar and section steel supplier; Universal Cement is a major ready-mixed concrete manufacturer in southern Taiwan and a national leader in gypsum board manufacturing; and Da Cin’s business mainly focuses on plant construction, with TSMC’s orders accounting for 40 percent of its revenue from this year to 2022, the investment consultancy said.
Meanwhile, rising housing and construction loans should be positive for financial firms such as Taiwan Cooperative Financial Holding Co (合庫金控) and First Financial Holding Co (第一金控), as these two state-run companies have more exposure to this area of business than their peers, Yuanta said.
Contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain the third-largest IC supplier this year, unchanged from last year, IC Insights said yesterday. IC designer MediaTek Inc (聯發科) is expected to become the 11th-largest, up from 16th last year, the semiconductor market research firm said. TSMC is expected to post US$45.42 billion in sales, up 31 percent from last year, IC Insights said in a report released on its Web site. TSMC’s sales growth is largely due to a surge in orders from Apple Inc and HiSilicon Technologies Co (海思半導體) — two of its major clients — which
SETTING AN EXAMPLE: The commission suspended the bank’s two top executives as ‘a warning to all banks,’ while the fine is the biggest to be given to a bank in a single case The Financial Supervisory Commission (FSC) yesterday fined E.Sun Commercial Bank (玉山銀行) NT$20 million (US$693,698) over a theft scandal and punished the bank’s two top executives. A customer relationship manager surnamed Pan (潘) at the bank’s branch in Kaohsiung’s Fengshan District (鳳山) stole NT$140 million from 41 clients over the past seven years, the commission said. Pan secretly transferred the stolen money to accounts belonging to her and her family members by using clients’ debit cards, passwords or documents that were stamped using the clients’ personal stamps between July 2013 and June this year, the commission said. The commission suspended Ben Chen (陳炳良), the
HARD ASK: At a meeting held by the MOEA to talk about the RCEP trade deal, trade associations said that they expect the government to push for more free-trade deals Business representatives yesterday urged the government to slow the appreciation of the New Taiwan dollar, saying that some Taiwanese industries have been undercut by rivals due to unfavorable foreign exchange rates. The government should also assist local industries to expand their domestic market, and push for more bilateral trade deals so that Taiwanese companies can enjoy zero or preferential tariffs on exports, following the nation’s exclusion from the Regional Comprehensive Economic Partnership (RCEP) which was signed by 15 Asia-Pacific nations on Nov. 15, they said at a meeting with the Ministry of Economic Affairs (MOEA). Some participants said that the NT dollar’s
BREATH OF LIFE: The firm said the under-utilized plant should start mass production in the first quarter, timed to coincide with Intel Corp’s release of its Ice Lake server chip Hon Hai Precision Industry Co (鴻海精密) plans to assemble key components for Google servers at its plant in Wisconsin, people familiar with the matter said, finally breathing life into a factory that US President Donald Trump hailed as crucial to bringing manufacturing back to the US. The company has decided to locate production for this new contract at the existing complex rather than make the components at home or in China, the people said, asking not to be identified. The under-utilized plant should start mass production in the first quarter, timed with the release of Intel Corp’s Ice Lake server chips,