An increase in COVID-19 cases and China’s lockdowns have cast a shadow over business prospects for local manufacturers, and property builders and brokers, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
Service providers, who are taking a hard hit as people avoid nonessential activities, appear less pessimistic based on expectations that things would improve once COVID-19 case numbers stabilize, TIER said in its monthly survey.
The confidence reading for the manufacturing industry declined 4.49 points to 99.1 — its lowest since July 2020 — as sales of machinery equipment, optical devices and plastic products slowed, although foundries held strong, the survey found.
Photo: Allen Wu, Taipei Times
The decline in sentiment had much to do with rising inflationary pressures induced by the Ukraine war, lockdowns in China and surging COVID-19 cases in Taiwan, said Gordon Sun (孫明德), director of the institute’s Economic Forecasting Center.
The number of manufacturers with positive outlooks dropped from 27.9 percent to 25.5 percent, while the number of those with dim outlooks climbed 7.1 points to 14.7 percent, the survey said.
Rising cost burdens prompted customers to become hesitant about placing new orders, explaining why more than 40 percent of machinery equipment suppliers expected the slowdown to persist over the next six months, it said.
Demand for smartphones and laptops lost noticeable momentum, weighing on selling prices for components such as memory chips, camera lenses and flat panels, the survey said, adding that chipmakers fortunately continued to run at full capacity and plan to raise selling prices to reflect cost hikes.
Makers of plastic products also entered a soft patch due to a decline in sales of disease prevention products as countries are choosing to coexist with COVID-19, it said.
The sentiment gauge for the service sector surprisingly rose by 0.21 points to 95.49 as shipping companies and logistics service operators became more optimistic about their business outlook in the next six months because the peak season for shipping consumer goods to the West has begun.
At the same time, travel agencies, hotels and restaurants — although bearing the brunt of the COVID-19 wave at present — are looking forward to Taiwan’s reopening, likely in the second half of this year, it said.
As for property developers and brokers, their confidence score tumbled 7.85 points to 96.1 after housing transactions shrank 11.2 percent in the six special municipalities, the survey said.
More than 40 percent of companies have negative views about the market’s future, citing economic uncertainty, monetary tightening, building material price hikes and labor shortages, it said, adding that spikes in virus cases took a toll on buying interest.
Separately, Samsung Group’s plan to invest US$356 billion in core technologies such as semiconductors is unlikely to displace Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) as the world’s largest contract chipmaker, as the South Korean conglomerate still lags behind TSMC in terms of manufacturing technology and customer relations, said Arisa Liu (劉佩真), a researcher at the Taipei-based institute.
Liu said that while Samsung is second to TSMC in terms of global foundry market share, the gap is huge, with TSMC holding a 52.9 percent share compared with Samsung’s 18.3 percent.
Additional reporting by CNA
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