The nation’s manufacturing output in the first quarter fell 13.59 percent year-on-year to NT$4.22 trillion (US$137.7 billion), as slowing global trade, weakening demand and ongoing inventory adjustments dragged down manufacturers’ capacity utilization, the Ministry of Economic Affairs said in a statement yesterday.
It was the second consecutive annual decline following a fall of 5.73 percent three months earlier, as firms in both technological and traditional industries posted a nearly across-the-board decline in production, the ministry said.
In the electronic components industry — the manufacturing sector’s most important segment — output decreased 16.85 percent to NT$1.25 trillion last quarter, ending 13 consecutive quarters of annual increases since the fourth quarter of 2019, ministry data showed.
Photo: Ritchie B. Tongo, EPA-EFE
Output by the chip industry fell 11.22 percent to NT$778.6 billion last quarter, as IC designers and DRAM makers lowered production to cope with weakening demand for electronic products and persistent inventory adjustments at semiconductor customers, the ministry said.
In addition, LCD panel makers reported declining output due to weakening demand for new applications and falling prices compared with a year earlier. As a result, production value last quarter decreased 46.52 percent to NT$108.8 billion, it said.
In comparison, suppliers of computers, and electronic and optical components continued to expand their production on the back of robust demand for cloud-based, data center-related equipment, while a major improvement in key components boosted production of servers and networking equipment, with output growing 5.15 percent year-on-year to NT$262.5 billion, increasing on an annual basis for the 18th consecutive quarter, the ministry said.
In traditional industries, producers of chemical materials and fertilizers last quarter posted a decline of 28.1 percent year-on-year to NT$392.6 billion, suppliers of base metals reported that their output declined 20.01 percent to NT$381.2 billion, while output at makers of machinery equipment decreased by 18.6 percent to NT$205.5 billion, it said.
The declines mainly reflect the effects of a slowing global economy, the ministry said, adding that manufacturers implementing annual maintenance and customers becoming more conservative in investment were also factors behind the fall in production.
The automobile and vehicle parts industry’s output grew 3.39 percent year-on-year last quarter, as some new car models sold well and a shortage of components eased, it said.
The ministry said the outlook for the domestic manufacturing sector would still be weighed by weak demand amid global inflation and monetary tightening by central banks, as well as the conflict between Russia and Ukraine and US-China technology disputes.
However, potential business opportunities in high-performance computing and automotive electronics, as well as emerging technology applications such as artificial intelligence, could help inject some growth momentum into local manufacturing sector going forward, it said.
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