The Industrial Technology Research Institute (ITRI) has slashed its growth forecast for the manufacturing sector to below 1 percent for this year, while warning that risks of a contraction are increasing.
The institute cut its growth forecast to 0.86 percent, a sharp downward revision from the 2.71 percent it projected in April and 2.93 percent in January.
Overall, the manufacturing sector is expected to generate NT$19.15 trillion (US$610.81 billion) in total revenue this year compared with last year’s NT$18.99 trillion, it said.
The institute’s Current Quarterly Model — a gauge of the local manufacturing sector’s risks of contraction — rose to 54.2 percent, approaching the 60 percent level, indicating a bust, ITRI said.
The figure was a healthy 38.4 percent in April.
The latest downward revision was across the board, with the biggest cuts falling on the chemicals sector — primarily petrochemicals — with annual revenues expected to shrink 4.2 percent to NT$5.15 trillion, instead of the 0.8 percent expansion the institute project in April.
“Global crude oil prices have plunged at a faster rate than we thought. We have to adjust our [crude oil] price assumption to US$65 a barrel, from our forecast of between US$70 and US$75 in April,” ITRI analyst Cheng Chih-chiang (陳自強) said.
Local petrochemical makers are expected to see revenues fall by 12 percent, outpacing the rate of decline for the chemical sector as a whole, the institute said.
Petrochemicals make up 30 percent of the local manufacturing sectors’ revenues.
“China’s weakening economic growth and rapid capacity expansion have curbed demand for [Taiwanese] petrochemical products,” Chen said.
China is the largest export destination of Taiwanese petrochemicals, accounting for 54.9 percent of the total, ITRI data showed.
Taiwanese petrochemical companies, led by Formosa Plastics Corp (台塑), returned to the black in the first quarter after crude oil prices stabilized, the institute said.
As demand for purified terephthalic acid (PTA) has declined by 90 percent over the past few years, local petrochemical companies have been seeking new growth opportunities in emerging markets such as India, Vietnam and Myanmar, Petrochemical Industry Association of Taiwan executive manager J.H. Shieh (謝俊雄) said.
Aside from petrochemicals, Taiwan’s electronics sector are also facing intensifying competition from Chinese manufacturers.
“Taiwan’s LCD industry is suffering the brunt of growing competition from China, due to a narrowing technology gap, with most locally made flat panels sold to China,” Chen said. “The adverse impact will be even more evident next year as more new Chinese capacities come onstream.”
Taiwan’s LCD revenues are expected to grow at a slower pace of 0.9 percent year-on-year to NT$946.66 billion this year, instead of the 3.1 percent ITRI estimated earlier this year.
The electronics sector as a whole would see a 4.38 percent annual growth in revenue to NT$6.29 trillion this year, down from a 5.09 percent expansion estimated in April, ITRI’s statistics showed.
ITRI said it does not rule out further cutting its forecasts, after several local companies last month issued a bleak outlook.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
ADVERSARIES: The new list includes 11 entities in China and one in Taiwan, which is a local branch of Chinese cloud computing firm Inspur Group The US added dozens of entities to a trade blacklist on Tuesday, the US Department of Commerce said, in part to disrupt Beijing’s artificial intelligence (AI) and advanced computing capabilities. The action affects 80 entities from countries including China, the United Arab Emirates and Iran, with the commerce department citing their “activities contrary to US national security and foreign policy.” Those added to the “entity list” are restricted from obtaining US items and technologies without government authorization. “We will not allow adversaries to exploit American technology to bolster their own militaries and threaten American lives,” US Secretary of Commerce Howard Lutnick said. The entities
Minister of Finance Chuang Tsui-yun (莊翠雲) yesterday told lawmakers that she “would not speculate,” but a “response plan” has been prepared in case Taiwan is targeted by US President Donald Trump’s reciprocal tariffs, which are to be announced on Wednesday next week. The Trump administration, including US Secretary of the Treasury Scott Bessent, has said that much of the proposed reciprocal tariffs would focus on the 15 countries that have the highest trade surpluses with the US. Bessent has referred to those countries as the “dirty 15,” but has not named them. Last year, Taiwan’s US$73.9 billion trade surplus with the US
RSS