Power consumption by industrial sectors last month declined from a year earlier, indicating that the business expansion cycle for the semiconductor industry has plateaued and could head toward a slowdown, the Taiwan Research Institute (台灣綜合研究院) said yesterday.
The electricity prosperity index (EPI), which the institute uses to gauge the health of industrial sectors, showed that energy consumption shrank 0.29 percent from a year earlier, the New Taipei City-based institute said.
The reading for heavy industrial users decreased 2.25 percent as global demand for electronics is losing momentum, it said, urging policymakers to heed the economic implications.
Photo: Tu Chien-jung, Taipei Times
Taiwan supplies 60 percent of the chips used in high-performance computing, laptops, big data analysis, automobiles and Internet of Things applications.
Global demand for advanced and mature chips remains strong in light of a double-digit percentage increase in power consumption among fabs, but sales of other semiconductor products are floundering, it said.
It is the third straight month the EPI has flashed a “flat” climate signal, meaning the boom in the semiconductor sector might have peaked and companies should plan for a slowdown ahead, the institute said.
The US, the largest end-market for consumer electronics, slipped into a technical recession in the first half, while strict COVID-19 controls are constraining economic activity in China. Together, the two markets account for more than 50 percent of Taiwan’s exports.
Electricity usage by non-technology manufacturers also displayed a negative cyclical movement and the technology sectors could not rescue the situation as they did last year.
Inflationary pressures are taking a toll on demand for base metals, and plastic and chemical products, the institute said.
Electricity generated via combined heat and power systems in June slumped 17.7 percent, the worst retreat in history, as suppliers purchased energy directly from state-run Taiwan Power Co (台電) to cope with spiking power generation costs, it said.
The EPI reading and softening export orders lent support to the forecast of an economic slowdown, but power consumption among service providers such as retailers, restaurants, hotels and recreational facilities increased 13.26 percent year-on-year, as people resumed gathering and dining out despite the lingering domestic COVID-19 outbreak, the institute said.
The institute earlier predicted that the nation’s economy expanded 3.3 percent in the first half of the year, weaker than the government’s 3.38 percent forecast.
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