The ratio of orders fulfilled by Taiwanese manufacturers overseas has consistently declined over the past several months as they shift operations back home, government statistics showed.
Last month, 48.8 percent of all export orders received by Taiwanese firms were produced in their overseas factories, down from 53.7 percent in the previous month and compared with 50.8 percent a year ago, the Ministry of Economic Affairs said on Thursday.
The ratio has continued to decline from September last year, when it was 57 percent, indicating that local companies are relocating production from China and other regions due to tariffs and other cost considerations, the ministry said.
The information technology and communications industry and the mechanical engineering sector led others by reporting that 91.2 percent and 74 percent of their export orders respectively were fulfilled by their overseas production bases last month.
However, those figures also fell for the fourth consecutive month, the data showed.
Other industries — such as base metals, rubber and plastic products, chemicals, electronic goods, and optical and machinery equipment — also saw declining overseas output ranging from 6.4 percent to 40.6 percent last month, the data showed.
The overseas production data came as the ministry on the same day released the latest tallies for export orders — which offer an indication of Taiwan’s products and components shipments to overseas markets over the next one to three months — came in at US$35.31 billion last month, down19.4 percent month-on-month and 12.8 percent year-on-year.
While the effects of the COVID-19 outbreak in China and the slow first quarter could hurt the performance of export orders, Taiwan might still benefit from 5G-driven growth — which is triggering foundry, packaging, testing and printed circuit board demand — and the relocation of supply chains, Yuanta-Polaris Research Institute (元大寶華綜經院) economist Yen Chen-hui (顏承暉) said in a report on Friday.
“The 5G trends that are driving semiconductor-related industries are still the most resilient part of Taiwan’s exports, and even without the coronavirus outbreak, first-quarter exports would still have been subdued due to seasonality and weak pricing,” Yen wrote.
“A temporary decline in external demand may cause a downward revision, but the trends are still intact,” Yen added.
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