Taiwan’s tech sector could face rising costs stemming from the war between Russia and Ukraine, while companies with operations in Eastern Europe are bracing for economic spillover from a war that is being fought “right up to their doorstep,” industry representatives said.
Despite Asia’s geographic distance from the conflict and its relatively low level of financial exposure to Russia and Ukraine, the comprehensive nature of the sanctions imposed on Moscow — including its exclusion from the SWIFT international payment system and a ban on semiconductor exports to Russia — make some spillover inevitable, experts said.
A number of Taiwanese tech firms have facilities in Poland, the Czech Republic and Slovakia, meaning the war is being fought “right up to their doorstep,” Taiwan Electrical and Electronic Manufacturers’ Association (電電公會) deputy secretary-general Yen Su-chiu (顏素秋) said.
Photo: CNA
While Russia accounts for less than 1 percent of Taiwan’s electronics exports, some of these firms might face bad debts and related cash flow problems as a direct or indirect result of the sanctions, she said.
A greater fear is that the economic impact of the conflict would spread across Eastern European markets.
Etay Lee (李宜泰), president of motherboard and graphics card manufacturer Gigabyte Technology Co (技嘉科技), said that while Russian clients accounted for less than 3 percent of the firm’s revenue, he was concerned about the potential for economic spillover in neighboring countries.
For many small to medium-sized Taiwanese firms with investments in the region, the question now is how and when to cut their losses to avoid potential cash flow issues and contractual disputes.
A survey of more than 100 Taiwanese firms with business in Russia and Ukraine, conducted on March 1 and 2, found that trade between the two countries had all but ceased after the outbreak of war on Feb. 24, the Importers and Exporters Association of Taipei (台北市進出口商業公會) said.
The survey found that about 70 percent of respondents were having difficulties collecting debts, while more than 20 percent were concerned about possible contractual disputes due to shipping delays or stoppages, the association said.
A final concern is the key position that Russia and Ukraine hold in the export of specific products, despite forming a combined total of just 2 percent of global trade, said Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at the French investment bank Natixis SA.
In a recent analysis, Garcia-Herrero highlighted Russia’s significant share of the export of products such as neon gas (70 percent), palladium (37 percent) and nickel (9 percent), which are vital to Asia’s semiconductor and electric vehicle battery producers.
“The proportion of these materials is small, but critical in supply chains,” meaning that the costs for these industries would grow if Russia restricts exports, she said.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure