The economy is forecast to grow 3 percent this year, slowing from a 4.4 percent increase last year, but consistent with a long-term growth trend on the back of rising demand for artificial intelligence (AI)-enabled smartphones, personal computers and other consumer electronics, Singapore-based DBS Bank Ltd (星展銀行) said yesterday.
Export growth is expected to remain in expansionary mode, although demand from AI data centers for servers would moderate after last year’s surge and a high base, DBS senior economist Ma Tieying (馬鐵英) said at a news conference in Taipei.
However, demand for AI-enabled mobile phones, notebook computers and other consumer electronic gadgets could gain traction, Ma said, noting that the upcycle in the global semiconductor sector typically lasts about 30 months and the current cycle, which began in September 2023, would therefore have the potential of extending throughout this year.
Photo: Wu Hsin-tien, Taipei Times
Private consumption is also to lose steam, but remain on trend given that the strong wealth effects of property and stock market rallies would taper off, she said.
Investment and speculative demand in the property market could diminish due to lingering credit controls, property taxes and anti-speculation measures, Ma said.
However, demand from first-time buyers and those seeking upgrades would remain resilient, she said.
Consumer price hikes would temper to 1.9 percent this year, lower than the 2.18 percent increase last year, with food and house prices normalizing from rapid advances induced by typhoons, electricity price hikes and higher housing rents, Ma said.
The US-China trade dispute and tech competition is set to escalate when US president-elect Donald Trump assumes power on Jan. 20, while Trump’s tariff threats on Chinese imports would impact Taiwanese manufacturers based there, she said.
Key products that Taiwanese companies produce in China include information and communications products, electrical machinery, optical instruments and electronic parts, Ma said.
Information and communications products and electrical machinery have a high resale ratio to the US, making them vulnerable to Trump’s 60 percent tariffs on Chinese goods, she said.
However, additional universal tariff hikes on all US imports would have limited impact on the competitiveness of Taiwanese products, she added.
As Taiwanese foundries command a dominant 80 percent of the global market for chips of 7-nanometer technology and below, Trump might pressure Taiwan to invest more in the US semiconductor sector and push for investment in 2-nanometer technology, posing challenges for Taiwan to retain its leadership in semiconductor technologies, Ma said.
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