The industrial production index last month expanded 1.12 percent year-on-year to 135.9, mainly driven by strong chips demand from the world’s major smartphone vendors and rising adoption of emerging technologies, the Ministry of Economic Affairs said yesterday.
Last month's increase represented the 30th consecutive month of annual rise, the ministry said. On a monthly basis, the index edged up 0.08 percent, it said.
The manufacturing production index, a major contributor to industrial production, expanded 1.03 percent from a year earlier to 136.88, but the index contracted 0.49 percent month-on-month due to depressed demand for petrochemicals, base metals and machine tools, offsetting growth in chips and high-end computers, the ministry said.
The ministry is cautious about the prospects of the manufacturing industry in the remainder of this year, if the macroeconomic environment does not improve and soaring inflation continues harming demand.
As a result, the manufacturing production index might dip 0.5 percent year-on-year to 137.4 this month in the worst-case scenario, dragged by persistent weakness in traditional industries, or rise 2.4 percent at best, the ministry said.
“We are still looking at positive growth in August,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone. “Traditional industries are expected to report further declines this month as rising inflation continues putting pressure on demand.”
On the positive side, inventory buildup demand for semiconductors and electronics is rising ahead of new launches by global brands, the ministry said.
For the third quarter, the manufacturing production index is expected to be flat or to grow by a single-digit percentage, Huang said.
The downside risk is higher next quarter, due to a higher comparison base in the fourth quarter last year when demand for local goods jumped after the US, China and European countries reopened their economies after the COVID-19 pandemic stabilized, he said.
Production of electronic components last month rose 0.64 percent month-on-month, or 9.26 percent year-on-year, supported by the semiconductor sub-index, which increased 1.35 percent month-on-month and 21.89 percent year-on-year.
The growth was fueled by robust demand for chips for automobiles and high-performance computing devices, such as servers and networking applications.
Displays and related products slumped 7.92 percent month-on-month and 41.92 percent year-on-year due to weak TV and tablet sales.
The production of computers and optical products slid 0.54 percent month-on-month, but rose 12.2 percent year-on-year.
The growth was driven by higher demand for data centers and high-end notebook computers, the ministry said, adding that local manufacturers are expanding capacity in response to rising demand.
Production in the petrochemicals sector last month shrank 6.53 percent month-on-month and 18.36 percent year-on-year, as customers became conservative about placing orders after entering an inventory digestion cycle.
To cope with falling demand, local manufacturers shut down some facilities for annual maintenance.
The production of basic metals dropped 8.23 percent month-on-month and 19.55 percent year-on-year due to sluggish demand for steel as customers had excessive inventories.
Production in the machinery sector fell 3.86 percent month-on-month and 6.71 percent year-on-year as customers were cautious about investing in new manufacturing equipment due to the slowing global economy, but increased demand from semiconductor companies helped cushion the negative effects.
The production of vehicles and auto components increased 7.23 percent month-on-month and 7.16 percent year-on-year due to annual promotions during Ghost Month and easing component shortages.
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