Taiwan needs to diversify its trade away from China, Minister of Finance Su Jain-rong (蘇建榮) said, citing uncertainties created by China’s “zero COVID-19” policy, and rising geopolitical tensions between Washington and Beijing.
The recent US technology curbs imposed on China have “increased the uncertainty of the market,” Su said in an interview on Friday, after the APEC finance ministers’ meetings in Bangkok.
He added that one of Taiwan’s goals is to “try to diversify our trade partners, our trade market, so that we are not going to put all our eggs in one basket.”
Photo: EPA-EFE
Taiwan’s trade has been pressured this year by waning demand from China and around the world, which has weighed on the export-dependent economy. Overseas shipments contracted last month for the first time since 2020, while export orders declined for the third time this year.
Officials have largely attributed the drop-off to China as COVID-19 restrictions and a property slump are depressing consumer and business confidence there.
Escalating US-China tensions have further clouded Taiwan’s outlook and rattled the global semiconductor industry. After the US announced tighter controls over chip exports to China this month, shares in Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) fell the most in 28 years. TSMC makes chips for major companies that rely on the Chinese market for much of their business, while also taking in about 10 percent of its own revenue from China-based customers.
Su said he had not talked formally last week with US Deputy Secretary of the Treasury Wally Adeyemo, but said he thinks both sides are looking at the US-China relationship.
“The United States is concerned about the supply chains of advanced chips,” he added.
Taiwan’s exports to China and Hong Kong have declined over the past couple of years due to COVID-19 restrictions and US-China disputes, slipping below 40 percent of Taiwan’s total exports, the minister said.
Su said Taiwanese businesses have already started relocating factories from China to Southeast Asia — not so much in the semiconductor industry, but in machinery and other labor-intensive sectors.
Vietnam and Thailand are targets, he added.
Taiwan has been looking to diminish its dependence on China in the past few years, and has explored ways to bolster trade and investment with Southeast Asia, India, Australia and New Zealand.
Taipei last year asked to join one of the Asia-Pacific’s biggest working trade deals, although its application is still pending.
The minister also said Taiwan is looking “very carefully” at how to manage financial stability, as the New Taiwan dollar has weakened this year and as the benchmark TAIEX has tumbled nearly 30 percent so far this year.
The TAIEX closed up 0.29 percent yesterday after gaining as much as 1.6 percent earlier, the first gain in four days, after short-selling curbs were implemented.
Global funds have pulled a net US$47 billion from local equities this year, putting Taiwan on track for its biggest annual outflow in more than two decades.
The US Federal Reserve’s interest rate hikes cause “a lot of problems for financial markets around the world, not just Taiwan,” Su said.
Another issue is the increasing costs of imports — as Taiwan brings in a lot of its raw materials from abroad, imported inflation is another risk, he said.
Should the Fed continue raising rates, the “Taiwanese dollar and financial stability may be affected significantly,” Su said. “It’s not easy to handle it, but we have to face it.”
EXPANSION: The investment came as ASE in July told investors it would accelerate capacity growth to mitigate supply issues, and would boost spending by 16 percent ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip assembly and testing service provider, yesterday said it is investing NT$17.6 billion (US$578.6 million) to build a new advanced chip packaging facility in Kaohsiung to cope with fast-growing demand from artificial intelligence (AI), high-performance-computing (HPC) and automotive applications. The new fab, called K18B, is to commence operation in the first quarter of 2028, offering chip-on-wafer-on-substrate (CoWoS) chip packaging and final testing services, ASE said in a statement. The fab is to create 2,000 new jobs upon its completion, ASE said. A wide spectrum of system-level chip packaging technologies would be available at
Taiwan’s foreign exchange reserves hit a record high at the end of last month, surpassing the US$600 billion mark for the first time, the central bank said yesterday. Last month, the country’s foreign exchange reserves rose US$5.51 billion from a month earlier to reach US$602.94 billion due to an increase in returns from the central bank’s portfolio management, the movement of other foreign currencies in the portfolio against the US dollar and the bank’s efforts to smooth the volatility of the New Taiwan dollar. Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民)said a rate cut cycle launched by the US Federal Reserve
HEAVYWEIGHT: The TAIEX ended up 382.67 points, with about 280 of those points contributed by TSMC shares alone, which rose 2.56 percent to close at NT$1,400 Shares in Taiwan broke records at the end of yesterday’s session after contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) hit a fresh closing-high amid enthusiasm toward artificial intelligence (AI) development, dealers said. The TAIEX ended up 382.67 points, or 1.45 percent, at the day’s high of 26,761.06. Turnover totaled NT$463.09 billion (US$15.22 billion). “The local main board has repeatedly hit new closing highs in the past few sessions as investors continued to embrace high hopes about AI applications, taking cues from a strong showing in shares of US-based AI chip designer Nvidia Corp,” Hua Nan Securities Co (華南永昌證券) analyst Kevin Su
Nvidia Corp’s major server production partner Hon Hai Precision Industry Co (鴻海精密) reported 10.99 percent year-on-year growth in quarterly sales, signaling healthy demand for artificial intelligence (AI) infrastructure. Revenue totaled NT$2.06 trillion (US$67.72 billion) in the last quarter, in line with analysts’ projections, a company statement said. On a quarterly basis, revenue was up 14.47 percent. Hon Hai’s businesses cover four primary product segments: cloud and networking, smart consumer electronics, computing, and components and other products. Last quarter, “cloud and networking products delivered strong growth, components and other products demonstrated significant growth, while smart consumer electronics and computing products slightly declined,” compared with the