Higher commodity prices and rising labor costs could bring an end to the recent improvement in operating margins and credit difficulties for the nation’s non-tech firms, Taiwan Ratings Corp (中華信評), a local unit of Standard & Poor’s Ratings Services, said yesterday in a report.
“Most non-tech firms that we rate in Taiwan slightly improved their adequate credit metrics over the past two quarters through deleveraging and capital expenditure cuts,” credit analyst Raymond Hsu (許智清) said in the report.
Taiwan Ratings said rising consumer demand, particularly from China, would continue providing support to Taiwanese chemical, building material and air and maritime transport firms’ operating performance in the next two quarters.
In addition, as worldwide consumer interest in tablet computers and smartphones continues to grow, Taiwanese firms that offer data and other telecommunication services will also see market demand increase significantly in the second half of the year.
“Nonetheless, profitability pressure from high and still-rising commodity prices have constrained non-tech firms’ credit profiles in recent quarters, which we expect to continue throughout 2011,” Hsu said in the report.
The report also said rising production and labor costs could undercut the profitability of non-tech companies and further impact the sector’s credit quality in the following two quarters.
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SECTOR LEADER: TSMC can increase capacity by as much as 20 percent or more in the advanced node part of the foundry market by 2030, an analyst said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to lead its peers in the advanced 2-nanometer process technology, despite competition from Samsung Electronics Co and Intel Corp, TrendForce Corp analyst Joanne Chiao (喬安) said. TSMC’s sophisticated products and its large production scale are expected to allow the company to continue dominating the global 2-nanometer process market this year, Chiao said. The world’s largest contract chipmaker is scheduled to begin mass production of chips made on the 2-nanometer process in its Hsinchu fab in the second half of this year. It would also hold a ceremony on Monday next week to
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