The nation’s industrial production index last month fell 8.68 percent from a year earlier to the lowest level in about three years at 106.78, dragged by flagging chip demand as customers digested inventory, the Ministry of Economic Affairs said yesterday.
Inventory adjustments led the manufacturing production index to drop 9.15 percent annually to 108.27 last month, hitting the lowest since March 2020, the ministry said.
The semiconductor sub-index fell 13.74 percent to 155.4, the lowest since 2020.
Photo courtesy of the Kaohsiung Economic Development Bureau via CNA
“Inventory correction in the semiconductor sector started later than other sectors. As customers stepped up inventory digestion last month, capacity utilization of mature process technologies declined,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.
As the macroeconomic uncertainty persists, the ministry expects industrial production to shrink by between 19.1 percent and 21.9 percent this month, extending a six-month downtrend, Huang said.
Manufacturing output would stay in the doldrums this month, as consumers remain cautious about spending on non-essential items as a result of high inflationary pressure and rising interest rates, Huang said.
Moreover, as borrowing costs rise, firms are reluctant to make new investments, he said.
“A reduction in inventory would not be enough to give local manufacturing production a boost. Only a solid pickup in end demand would work,” Huang said.
This month’s performance would be critical, he said.
If it turns out better than expected, that could be a sign the electronics industry’s inventory correction has come to an end, Huang added.
The ministry’s latest statistics showed that electronic component output slumped 19.6 percent annually in the first two months of this year, as flat-panel production plunged 52.68 percent due to sluggish demand for consumer electronics, while demand for memory chips and foundry services also sank.
The production of computers and optical components dropped 1.17 percent in the January-to-
February period, as steady demand for cloud-based servers, networking devices and computers failed to offset sagging demand for data storage, TVs and semiconductor equipment, the ministry said.
The petrochemicals sector saw production plunge 20.46 percent in the first two months due to slow orders from electronics and semiconductor companies, while the production of basic metals shrank 15.77 percent and the machinery sector fell 20.59 percent, the ministry said.
The production of vehicles and auto components fell 2.33 percent in the first two months, as US and European customers continued to deplete their inventories, it said.
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