The local semiconductor industry is expected to face earnings challenges in 2025 as profit growth is likely to peak this year, the Taipei-based China Credit Information Service Ltd (CCIS, 中華徵信所) said in a report on Tuesday last week.
Industry profit declines are to become more apparent in 2025 as the US, Europe, South Korea and Japan, which compete with Taiwan in the semiconductor industry, are scheduled to fulfill their expansion plans by that year as they strive for a higher share of the global semiconductor market, the report said.
Additionally, China is expected to reduce its dependence on Taiwan’s semiconductor exports, which would further affect local export earnings, it said.
As Taiwanese semiconductor firms incur higher investment costs in their overseas expansion, the industry is expected to see slowing profit growth, it added.
However, CCIS said that old economy industries — such as textile firms, electric equipment suppliers and machinery makers — performed better in the first half of this year, compared with the same period last year.
Taiwan’s technology sector is expected to benefit from the launch of the iPhone 14 and a booming global electric vehicle market in the second half of this year, it said.
The CCIS report showed that the local manufacturing sector posted its highest profit margins in 10 years last year, and the uptrend is expected to continue this year despite several uncertainties, including skyrocketing global inflation, a rate hike cycle launched by the US Federal Reserve, the war in Ukraine and an economic slowdown in China.
The local manufacturing sector’s gross margin rose to 12.4 percent last year from 10.2 percent in 2020, while its operating margin increased to 7.8 percent from 5.1 percent, the report said.
Net margin also rose to 11.3 percent from 8.0 percent in 2020, it added.
The optoelectronics and precision equipment industry last year had the highest gross margin at 30.9 percent, marking the fourth consecutive year it has finished on top, CCIS said.
The rubber and plastics, non-metal mineral, agriculture and food, and machinery industries took second to fifth place at 26.4 percent, 20.57 percent, 20.24 percent and 19.8 percent respectively, it said.
German Chancellor Olaf Scholz and German Minister for Economic Affairs and Climate Action Robert Habeck have promised to solve investment subsidy issues for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and Intel Corp, despite the country’s budget woes. Uncertainty over the funding to TSMC and Intel has arisen after a ruling by the German Federal Constitutional Court, which cast doubt over subsidies for construction of local semiconductor chip plants. On Nov. 15, the court ruled that the German government’s decision last year to reallocate 60 billion euros (US$65.74 billion) of unused funding from COVID-19 pandemic support measures to its Climate and Transformation Fund
LONG ROAD AHEAD: The US is somewhere between one and two decades away from achieving the Biden administration’s goal to achieve chip autonomy, Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), who runs the semiconductor industry’s most valuable company, said the US is as much as 20 years away from breaking its dependence on overseas chipmaking. Huang, speaking at the New York Times’ DealBook conference in New York on Wednesday, explained how his company’s products rely on myriad components that come from different parts of the world — not just Taiwan, where the most important elements are manufactured. “We are somewhere between a decade and two decades away from supply chain independence,” he said. “It’s not a really practical thing for a decade or two.” The outlook suggests
CHINA NOT A FRIEND: ‘Newsflash: Democracy is good for your businesses,’ US Secretary of Commerce Gina Raimondo said as she gave a speech at a national defense forum US Secretary of Commerce Gina Raimondo on Saturday urged lawmakers, Silicon Valley and US allies to stop China from getting semiconductors and cutting-edge technologies key to national security. Speaking at an annual national defense forum in Simi Valley, California, Raimondo called Beijing “the biggest threat we’ve ever had” and stressed that “China is not our friend.” The world’s top two economies are locked in a fierce commercial and geopolitical rivalry, in which her department plays a leading role. In October, Raimondo unveiled a series of restrictions on the export of advanced chips to China, including those used in the development of artificial intelligence
GREEN SOLUTIONS: The company said that it is set to become one of the very few suppliers of low-carbon emissions cement, which would give it a competitive edge Taiwan Cement Corp (台灣水泥) plans to spend up to 770 million euros (US$843.5 million) to boost its holdings in two cement ventures in Turkey and Portugal as demand for low-carbon emissions cement rises in Europe, the company said on Monday. Taiwan Cement’s board of directors has approved a plan to lift the company’s stake in OYAK Denizli Cimento, a joint venture with Turkey’s OYAK Group, to 60 percent from 40 percent and to increase its stake in Cimpor Portugal Holdings SGPS SA, a Portuguese cement joint venture with OYAK, to 100 percent from 40 percent, it said in a statement. “Through increased