Taiwan’s export orders are on track to return to growth this year, driven mainly by the artificial intelligence (AI) boom, snapping two years of declines. Orders are expected to expand up to 4.3 percent annually to about US$539.35 billion this year amid thriving demand for AI chips and AI servers, the Ministry of Economic Affairs said.
However, the focus on the technology sector and a capricious external environment spell trouble for this key economic indicator.
Taiwan is heavily reliant on the technology sector for growth, even though traditional sectors such as basic metals, machinery equipment and chemical products have emerged from a deep slump. About 68 percent of the nation’s export orders in the first 10 months of this year, valued at US$554.5 billion, came from electronic products, chips primarily, and information and communication technology (ICT) devices. In 2014, ICT and electronic products made up about 52 percent of overall export orders, ministry data showed.
Last month, the US accounted for more than 30 percent of ICT product orders and more than 40 percent of electronic products orders, the data showed. That means any trade policy changes that the incoming administration of US president-elect Donald Trump introduces would affect Taiwan.
Manufacturers and exporters are bracing for protectionist trade policies under Trump’s “make America great again” ideals, among which is to boost US manufacturing by imposing tariffs of at least 10 percent on foreign companies, depending on the country.
To address the issue, local manufacturers are adopting an agile stance and are cautiously managing their overseas production sites. Any setbacks in supply chain management might result in losses in new orders, which would have a knock-on effect on Taiwan’s economy.
Hon Hai Precision Industry Co, the world’s biggest electronics manufacturer, last week said that it planned to expand production capacity of AI servers based on Nvidia Corp’s Blackwell chips in Taiwan, the US and Mexico to cope with rising demand. Another Nvidia server supplier, Wistron Corp, also said it did not rule out making servers in the US, “if it is necessary.” Wistron is boosting capacity at its Mexico factory to cope with rapid increases in orders.
For Taiwan’s traditional sectors, it is a different story. Companies are struggling to get out of the woods, given sluggish demand from China, the biggest export destination for local producers of chemical, petrochemical and machinery products.
Moreover, Chinese rivals are nibbling away at Taiwan’s — and everyone else’s — share of the global market by exporting as much as possible at lower prices amid poor domestic demand.
Export orders for rubber, chemical and machinery products made in Taiwan have fallen well behind technology products, the ministry data showed.
Although Beijing has launched economic stimulus packages, it is unclear whether they would revive its economy, so Taiwanese firms are seeking to diversify their markets, including by expanding their presence in the US, Southeast Asia and Europe, the ministry said.
However, it would take time to make significant progress, as local firms do not benefit from lower tariffs as global peers do in the absence of free trade pacts between Taiwan and many other countries.
With technology companies facing rising uncertainty as Trump prepares to re-enter the White House amid a slow recovery in traditional sectors, Taiwan’s economy faces a bumpy road. As most companies in the traditional sectors are small or medium-sized, they need more government aid and resources to deal with the situation. The government also needs to ponder how to rebalance the economy.
In the first year of his second term, US President Donald Trump continued to shake the foundations of the liberal international order to realize his “America first” policy. However, amid an atmosphere of uncertainty and unpredictability, the Trump administration brought some clarity to its policy toward Taiwan. As expected, bilateral trade emerged as a major priority for the new Trump administration. To secure a favorable trade deal with Taiwan, it adopted a two-pronged strategy: First, Trump accused Taiwan of “stealing” chip business from the US, indicating that if Taipei did not address Washington’s concerns in this strategic sector, it could revisit its Taiwan
The Chinese Communist Party (CCP) challenges and ignores the international rules-based order by violating Taiwanese airspace using a high-flying drone: This incident is a multi-layered challenge, including a lawfare challenge against the First Island Chain, the US, and the world. The People’s Liberation Army (PLA) defines lawfare as “controlling the enemy through the law or using the law to constrain the enemy.” Chen Yu-cheng (陳育正), an associate professor at the Graduate Institute of China Military Affairs Studies, at Taiwan’s Fu Hsing Kang College (National Defense University), argues the PLA uses lawfare to create a precedent and a new de facto legal
The stocks of rare earth companies soared on Monday following news that the Trump administration had taken a 10 percent stake in Oklahoma mining and magnet company USA Rare Earth Inc. Such is the visible benefit enjoyed by the growing number of firms that count Uncle Sam as a shareholder. Yet recent events surrounding perhaps what is the most well-known state-picked champion, Intel Corp, exposed a major unseen cost of the federal government’s unprecedented intervention in private business: the distortion of capital markets that have underpinned US growth and innovation since its founding. Prior to Intel’s Jan. 22 call with analysts
Chile has elected a new government that has the opportunity to take a fresh look at some key aspects of foreign economic policy, mainly a greater focus on Asia, including Taiwan. Still, in the great scheme of things, Chile is a small nation in Latin America, compared with giants such as Brazil and Mexico, or other major markets such as Colombia and Argentina. So why should Taiwan pay much attention to the new administration? Because the victory of Chilean president-elect Jose Antonio Kast, a right-of-center politician, can be seen as confirming that the continent is undergoing one of its periodic political shifts,
RSS