Cathay Financial Holding Co (國泰金控) yesterday raised its forecast for Taiwan’s economic growth this year from 2.8 percent to 3 percent, saying that robust demand for artificial intelligence (AI) products would help exports come out of the woods.
The projection is lower than the 3.43 percent increase that the Directorate-General of Budget, Accounting and Statistics (DGBAS) predicted last month, as the research team is less optimistic about private investment and consumer spending.
“Upcoming electricity rate hikes would weigh on private consumption and corporate margins,” National Central University economics professor Hsu Chih-chiang (徐之強) said on behalf of the panel.
Photo: Wu Hsin-tien, Taipei Times
Policymakers and experts are due to review electricity rates this month. Government officials have indicated that rate increases across the board are necessary to reflect rising costs and to keep debt-ridden Taiwan Power Co (台電) afloat.
The electricity rate hikes, which are to go into effect next month, would also negatively affect corporate earnings, as industrial and commercial users face steeper adjustments, Hsu said.
As the DGBAS has said that every 10 percent increase in electricity rates would push up inflation by 0.2 percentage points, the Cathay Financial team expects consumer prices to rise 1.9 percent this year, higher than its previous forecast, he said.
Private consumption, the main growth driver last year, would take a backseat this year due to lingering inflationary pressures, weakening “revenge spending” and a high comparison base last year, he said.
Meanwhile, companies are still conservative about capital expenditure, with private investment likely to remain in contraction territory this quarter, as evidenced by poor imports of capital equipment, especially for semiconductors, he said.
Exports would again become a key growth driver, aided by strong global demand for AI equipment and applications, he said.
Taiwan is home to the world’s largest suppliers of high-end chips and servers.
Against that backdrop, the central bank is likely to hold interest rates steady next week and the entire year in a bid to tame inflation and support the economy, Hsu said.
The neutral policy stance would continue even if the US Federal Reserve cuts interest rates in the second half of this year to avoid an economic hard landing in the US, Hsu said.
Taiwan’s central bank has maintained its discount rate at 1.875 percent since March last year.
That rate is quite low, compared with the Fed’s 5.25 to 5.5 percent rate, rendering rate cuts unnecessary for Taiwan’s central bank, he said.
RUN IT BACK: A succesful first project working with hyperscalers to design chips encouraged MediaTek to start a second project, aiming to hit stride in 2028 MediaTek Inc (聯發科), the world’s biggest smartphone chip supplier, yesterday said it is engaging a second hyperscaler to help design artificial intelligence (AI) accelerators used in data centers following a similar project expected to generate revenue streams soon. The first AI accelerator project is to bring in US$1 billion revenue next year and several billion US dollars more in 2027, MediaTek chief executive officer Rick Tsai (蔡力行) told a virtual investor conference yesterday. The second AI accelerator project is expected to contribute to revenue beginning in 2028, Tsai said. MediaTek yesterday raised its revenue forecast for the global AI accelerator used
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has secured three construction permits for its plan to build a state-of-the-art A14 wafer fab in Taichung, and is likely to start construction soon, the Central Taiwan Science Park Bureau said yesterday. Speaking with CNA, Wang Chun-chieh (王俊傑), deputy director general of the science park bureau, said the world’s largest contract chipmaker has received three construction permits — one to build a fab to roll out sophisticated chips, another to build a central utility plant to provide water and electricity for the facility and the other to build three office buildings. With the three permits, TSMC
The DBS Foundation yesterday announced the launch of two flagship programs, “Silver Motion” and “Happier Caregiver, Healthier Seniors,” in partnership with CCILU Ltd, Hondao Senior Citizens’ Welfare Foundation and the Garden of Hope Foundation to help Taiwan face the challenges of a rapidly aging population. The foundation said it would invest S$4.91 million (US$3.8 million) over three years to foster inclusion and resilience in an aging society. “Aging may bring challenges, but it also brings opportunities. With many Asian markets rapidly becoming super-aged, the DBS Foundation is working with a regional ecosystem of like-minded partners across the private, public and people sectors
BREAKTHROUGH TECH: Powertech expects its fan-out PLP system to become mainstream, saying it can offer three-times greater production throughput Chip packaging service provider Powertech Technology Inc (力成科技) plans to more than double its capital expenditures next year to more than NT$40 billion (US$1.31 billion) as demand for its new panel-level packaging (PLP) technology, primarily used in chips for artificial intelligence (AI) applications, has greatly exceeded what it can supply. A significant portion of the budget, about US$1 billion, would be earmarked for fan-out PLP technology, Powertech told investors yesterday. Its heavy investment in fan-out PLP technology over the past 10 years is expected to bear fruit in 2027 after the technology enters volume production, it said, adding that the tech would
RSS