Growth in the production value of semiconductors is forecast to slow next year, as downside risks from the trade dispute between the US and China escalate and pricing competition from China intensifies, the Industry, Science and Technology International Strategy Center (產科國際所) said on Wednesday.
The nation’s semiconductor industry is expected to expand between 4.5 and 5.3 percent annually to between NT$2.73 trillion and NT$2.75 trillion (US$88.1 billion and US$88.7 billion) next year, from an estimated 5.9 percent to NT$2.61 trillion this year, according to the state-funded research house, formerly known as the Industrial Economics and Knowledge Center (產業經濟與趨勢研究中心).
“This is mild a growth, indicating that the latest upcycle has not yet peaked,” Jerry Peng (彭茂榮), a semiconductor analyst at the Hsinchu-based center, told a media briefing.
However, for the first time in two years, the local semiconductor industry would expand at a faster rate than the global chip industry, which is forecast to grow 4.4 percent, Peng said.
Citing challenges ahead, Peng said that Chinese semiconductor firms, which offer more competive prices, have become an increasing threat to Taiwanese companies focusing on mid-to-low-range products.
“Chinese companies have seen a rapid expansion of capacity and good progress in securing technologies and talent, backed by government funds and all sorts of incentives,” Peng said.
The escalating US-China trade war could harm the global economy, weighing on US consumer confidence as prices of daily necessities and consumer electronics rise due to higher import tariffs, he said.
Decelerating smartphone shipments and falling PC demand could also curb the growth of Taiwan’s semiconductor industry next year, he said.
The trade war has also cast a shadow on the outlook for Taiwan’s manufacturing sector next year, the center said.
The production value of the manufacturing sector is forecast to grow 3.21 percent next year to NT$20.07 trillion, compared with an estimated growth of 4.75 percent to NT$19.45 trillion this year, the center said.
“It is very likely that we will cut this forecast if the trade war escalates,” Peter Cheng (陳志強), an analyst tracking the manufacturing sector for the center, said on the sidelines of the media briefing.
“One thing that matters most to us is whether local manufacturers can smoothly relocate their production lines from China to other places next year” to avoid US tariffs, Cheng said.
“It is uncertain whether there will be more tax lists from [US] President Donald Trump,” Cheng added.
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