Taiwan’s per capita GDP is expected to reach US$35,510 this year, outpacing Japan’s US$34,360 and South Korea’s US$33,590, IMF projections showed. It would be the first time since 2003 that Taiwan’s per capita GDP surpassed Japan’s and South Korea’s.
The IMF also expects Taiwan’s economy to grow 3.3 percent, primarily backed by the semiconductor industry, as COVID-19 restrictions and geopolitical tensions have led to a chip crunch.
Taiwan’s semiconductor industry has emerged as a major economic growth engine over the past 10 years, accounting for 60 percent of overall manufacturing output. The manufacturing sector is Taiwan’s biggest growth engine, making up more than 30 percent of GDP.
As a result, Taiwan Semiconductor Manufacturing Co, the biggest contributor to the semiconductor industry’s production value, has come to be known as a “sacred mountain protecting the country” and the sector is considered to be “protecting” Taiwan. Therefore, the sector’s ups and downs play a deciding role in GDP performance.
The global economy is facing greater downside risks as consumers worldwide hesitate to spend on non-essential items, such as smartphones and other electronic gadgets, amid soaring energy bills. That has led to concern that chip demand could slump, taking Taiwan’s economy down with it. Chung-Hua Institution for Economic Research vice president Wang Jiann-chyuan (王健全) has said that Taiwan’s semiconductor industry would only thrive for another two to three years.
This has led to questions as to whether Taiwan is overly dependent on a single growth driver and which industry would be big enough to fuel economic growth down the road.
Some insiders have pinned their hopes on the rapidly growing electric vehicle (EV) sector, given its strong growth momentum in contrast to significant declines in PC and smartphone sales. Global sales of new energy vehicles are expected to reach 25 million units by 2025, compared with less than 5,000 in 2020, TrendForce Corp has said. The penetration rate of electric vehicles is expected to reach 42 percent by that time, compared with 6.7 percent in 2020.
In the past, Taiwanese companies used to follow global industry leaders, settling for slim profit margins.
However, they now have an opportunity to compete with their global rivals on a level playing field, as the EV market is a relatively new field, with industry standards and platforms still under development.
Power management solutions provider Delta Electronics Inc expects to double its revenue by 2030 from last year’s US$13 billion, driven by EV-related products including charging piles. Delta founder Bruce Cheng (鄭崇華) is eyeing a 15 percent global market share in EV-related products by 2030, compared with about 8 percent this year.
With the global shift toward EVs, local auto component suppliers said they now have a chance to directly access automakers. In the past, they remained tier-two suppliers shipping their products to tier-one firms supplying the world’s major automakers.
Hon Hai Precision Industry Co has also been tapping the EV market to reduce its dependence on the iPhone assembly business. It first created an EV platform called MIH to build EV prototypes in collaboration with members from across industries. MIH has garnered about 2,500 members since its launch two years ago.
Hon Hai aims to sell hardware and software, and provide EV assembly services to automakers. It aims to control 5 percent of the global EV market by 2025.
Electric vehicles might prove to be Taiwan’s next growth driver, following the semiconductor sector.
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