The production value of Taiwan’s manufacturing sector fell to NT$2.94 trillion (US$99.63 billion) in the second quarter, an 11.39 percent decline from a year earlier and the sixth consecutive quarter of contraction, the Ministry of Economic Affairs said yesterday.
Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said that traditional manufacturing and chemical production have been hardest-hit by declining demand amid the COVID-19 pandemic, as well as falling prices for oil and other raw materials.
The petrochemical industry reported production value contracted by 54.7 percent year-on-year, while output among automakers and in the automotive parts industry fell 22.1 percent from a year earlier, the ministry said.
In the metal manufacturing industry, production value fell 18.7 percent and in the machinery industry it was down 13.8 percent year-on-year, it said.
However, computing and electronic components grew for the ninth straight quarter, due to strong international demand for electronics and continued capacity expansion among Taiwanese manufacturers, the ministry said.
Computer electronics and optoelectronics components posted output growth of 7.6 percent year-on-year, while the electronics components industry grew 10.6 percent, ministry data showed.
Industrial production increased 4.7 percent year-on-year, the third quarter of growth and the highest for the quarter on record, the data showed.
However, production value is calculated by multiplying production by price, and a slide in prices means that even with increased output, production value is trending down, the ministry said.
“Oil and other raw material prices picked up in the quarter, but it was a slow climb and there still is a long way to go before we could reach the pre-COVID-19 prices,” Huang told the Taipei Times by telephone.
Although it might be counter-intuitive, low material prices can be bad news for companies, he said.
“Low material prices mean lower product prices. This means less revenue for the company. Yet costs such as rent and labor remain fixed,” he said
Huang said that he expects demand for electronics to remain robust this quarter, while further increases in prices for oil and steel would stabilize hard-hit traditional manufacturing industries.
“However, the possibility of a global COVID-19 resurgence could disrupt all that,” he said.
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