Taiwan has increasingly shifted its investment focus away from China to the ASEAN and US markets, as major tech firms seek to improve supply chain resilience and diversify investment risks, DBS Group Holdings Ltd said in a report yesterday.
Taiwan’s tech sector would remain competitive globally over the next five years while increasing supply chain resilience ranks a top priority, Singapore-based DBS economist Ma Tieying (馬鐵英) said in the report.
ASEAN is set to become Taiwan’s largest foreign direct investment destination, after foreign direct investment in ASEAN member states totaled US$4 billion in the first 10 months of last year, Ma said.
Photo: CNA
It accounted for 32 percent of all outward foreign direct investment, a sharp increase from 14 percent before US-China trade tensions began in 2017, she said.
Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團) globally, and Pegatron Corp (和碩) have expanded investment in Vietnam and India to assemble smartphones, PCs, tablets and other electronics for their clients, notably Apple Inc, Ma said.
Contract chipmaker United Microelectronics Corp (UMC, 聯電) has also spent US$5 billion building a new 22 and 28-nanometer wafer fab in Singapore, she added.
The US is emerging as a major investment destination for Taiwanese companies.
Taiwan’s direct investment in the US exceeded US$8 billion in the past four years, nearly a fourfold increase from US$2.2 billion between 2013 and 2017, driven largely by investment in the semiconductor sector, Ma said.
Taiwan Semiconductor Manufacturing Co’s (台積電) first foundry in Arizona, which is under construction, is expected to start to producing 4-nanometer chips next year.
The world’s largest advanced chipmaker has said that it also plans to produce 3-nanometer chips at the Arizona fab by 2026.
At the same time, inbound foreign direct investment in Taiwan’s electricity and gas sector rose more than 10 times to US$1.5 billion over the first 10 months of last year, the report said.
Foreign direct investment from European countries increased nearly fourfold from a year earlier, with Denmark’s Orsted A/S, for instance, augmenting its investment in the wind farm projects in Changhua County, it said.
Taiwan’s green energy transition has begun to gain momentum, creating greater opportunities for foreign investors, the report said.
Electricity from renewable energy sources surged 36 percent year-on-year in the first 10 months of last year, making up 8 percent of all electricity supply, up from 6 percent a year earlier, it said.
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