Taiwan’s technology sector, in particular the semiconductor industry, is expected to remain a key driver of its economic growth next year, DBS Bank Ltd said in a report last week.
However, tech companies would still be pressured to shift sensitive production out of China and further diversify their supply chains as the US-China technology dispute takes root, the bank said.
Strong technology exports boosted the nation’s GDP, which expanded by a better-than-expected 3.92 percent year-on-year last quarter, the most since the second quarter of 2015. That prompted the Directorate-General of Budget, Accounting and Statistics (DGBAS) on Nov. 27 to adjust upward its full-year growth forecast to 2.54 percent from 1.56 percent.
Photo: CNA
The DGBAS predicted exports might remain strong this quarter and grow 7.75 percent year-on-year on the back of strong demand for new technology applications, but DBS said that global demand for computers and consumer electronics is expected to decline next year, as “the one-off purchases related to remote work and distance learning” driven by the COVID-19 pandemic dissipate.
However, demand for cloud services, data centers and 5G applications would likely continue to increase next year, as many countries build digital infrastructure and push digital transformation after the pandemic, DBS said.
In addition, smartphone demand is poised to recover next year as global income conditions improve and more consumers upgrade their smartphones as 5G networks expand, it said.
“Overall, the outlook for semiconductor demand remains constructive,” DBS economist Ma Tieying (馬鐵英) said in the report.
Taiwan has managed to maintain positive GDP growth this year despite the pandemic, which DBS forecast would expand 1.8 percent this year and 4.2 percent next year, citing the government’s early and effective response to the outbreak, as well as the tech sector’s strong performance.
Given the mild inflation outlook and the strong New Taiwan dollar, the central bank is expected to hold its policy interest rate steady at 1.125 percent through next year, as pressure to normalize rates would remain low in the near term, DBS said.
However, the potential impact of the US’ transition in leadership is worth watching, and there could be some tactical adjustments in US-China trade issues as multilateralism regains US support under US president-elect Joe Biden’s administration, the bank said.
Even though US-China trade tensions might improve under Biden’s presidency, the two countries’ tech sector rivalry would continue next year, DBS said, citing bipartisan concerns in the US about national security risks resulting from China’s advances in 5G, artificial intelligence and other new technologies.
Moreover, the COVID-19 has also caused companies to weigh the risks of geopolitical tensions among countries and diversify their supply chains, with some firms shifting their manufacturing base out of China to other Asian countries such as India, Vietnam and Thailand.
“To Taiwan, the trade disruption risk as a result of [the] China-US trade war may decrease in 2021. But pressure would remain for the Taiwanese tech companies to diversify their supply chains to hedge the risk of China-US tech tensions,” Ma said.
“In addition, [the] leadership transition in the US creates some uncertainties for the outlook of a bilateral free-trade agreement (FTA) between Taiwan and the US. The focus of Taiwan’s FTA talks may shift towards multilateral agreements like the CPTPP [Comprehensive and Progressive Agreement for Trans-Pacific Partnership] going forward,” she added.
Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday. Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year. CAUTION ON CHINA However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RISING: Strong exports, and life insurance companies’ efforts to manage currency risks indicates the NT dollar would eventually pass the 29 level, an expert said The New Taiwan dollar yesterday rallied to its strongest in three years amid inflows to the nation’s stock market and broad-based weakness in the US dollar. Exporter sales of the US currency and a repatriation of funds from local asset managers also played a role, said two traders, who asked not to be identified as they were not authorized to speak publicly. State-owned banks were seen buying the greenback yesterday, but only at a moderate scale, the traders said. The local currency gained 0.77 percent, outperforming almost all of its Asian peers, to close at NT$29.165 per US dollar in Taipei trading yesterday. The
RSS