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.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
RSS