Industrial production last month dipped for an 18th consecutive month due to weak demand for chips and electronic components, the Ministry of Economic Affairs said yesterday.
The industrial production index contracted 2.48 percent year-on-year to 92.19 last month, meeting the ministry’s expectations of between 89.28 and 93.28, it said.
The manufacturing production index, which contributed 95.41 percent to the industrial production index, fell 2.18 percent to 92.38 last month, also marking an 18th straight month of decline, the ministry said.
Photo: Ritchie B. Tongo, EPA-EFE
The 18-month decline in both the industrial production index and the manufacturing production index was the longest period of weakness in Taiwan's history, it said.
In the first 11 months of this year, the industrial production index was down 13.22 percent from a year earlier, while the manufacturing production index fell 13.65 percent, ministry data showed.
This month, the ministry’s survey showed that the manufacturing production index would be in the range of 90.27 to 94.27, indicating an annual increase of 0.3 percent in the best-case scenario.
With rising demand for artificial intelligence (AI)-enabled smartphones and PCs, coupled with the effect of a low comparison base this year, there would be a good chance of the manufacturing production index remaining in positive territory next month and in the first quarter of next year, the ministry said.
“This year, demand for server and AI applications was mostly driven by enterprises. Next year, AI demand should multiply when the function is introduced to smartphones and PCs, which are larger markets than servers. As a result, the consumption of chips would increase,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone yesterday.
However, “unstable outbound demand is a major factor weighing on Taiwan’s manufacturing production. We have not seen clear signs indicating a strong recovery in the global economy next year,” Huang said. “Supply chain inventory has not returned to normal levels yet, although it has been slimming down this year.”
The production of electronic components, which mainly comprise semiconductors and flat panels, shrank 2.48 percent last month, but the production of computers and optical components advanced 14.01 percent, ministry data showed.
It was the only segment that reported year-on-year expansion, aided by robust demand for servers and AI applications, the ministry said.
Demand for camera lenses made by Largan Precision Co (大立光) and its local peers also increased, the ministry said.
The production of base metals and steel dropped 3.68 percent last month as steel mills cut production to cope with weak end-market demand, while the petrochemicals sector also saw production contract 0.81 percent due to sluggish demand, as customers were still digesting inventory, it said.
Machinery equipment production sank 12.09 percent as economic weakness weighed on firms’ capital spending, while the production of automotive-related products dipped by 1.04 percent, it said.
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