Taiwan does not have the “Dutch disease,” Minister of Finance Su Jain-rong (蘇建榮) said yesterday, referring to an overreliance on a temporarily surging sector at the cost of other industries.
The government supports a variety of sectors, not just the semiconductor industry, whose development “does not harm other sectors,” he said.
Su’s comments came after opposition lawmakers said that Taiwan has become overly reliant on a few tech firms, while non-tech manufacturing sectors are declining.
Photo: CNA
The term “Dutch disease” was coined in 1977 by The Economist to describe the decline of the Dutch manufacturing sector after the discovery of the large Groningen natural gas field in 1959.
The Netherlands posted annual trade surpluses from 1970 to 1980 on the back of natural gas exports, which drove up the country’s currency and led to manufacturers becoming less competitive internationally, with many eventually moving their production abroad.
Lawmakers said the local economy is comparable to the Netherlands at the time.
Taiwan’s “small and open” economy is taking a similar development as the European country, with increasing reliance on chip exports, and profitability and wages in the chip sector and other industries increasingly diverging, they said.
Su dismissed the comparison, saying the government has sought to promote the “five plus two” industries by developing Taiwan into a regional technology hub, shoring up local firms that supply smart machinery, and developing green energy sources, biomedicine and national defense.
President Tsai Ing-wen (蔡英文) is seeking to establish a new agricultural model and a circular economy, Su said.
Local semiconductor firms command global leadership positions, but small and medium-sized firms in other sectors also contribute significantly to GDP growth and employ many people, he said.
The central bank has said that Taiwan’s non-tech manufacturers, such as suppliers of plastic and chemical products, remain competitive, although they generate less added value than local tech firms.
Local makers of steel products, bicycles and vehicle parts have gained significant global market shares, the central bank said.
However, non-tech manufacturers lag behind tech firms in terms of wages, but that is due to supply and demand in the job market, rather than resource distribution or currency movements, it said.
Local electronics suppliers have benefitted from a work-from-home boom during the COVID-19 pandemic and global supply chains moving away from China, the central bank said.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
CHANGING JAPAN: Nvidia-powered AI services over cellular networks ‘will result in an artificial intelligence grid that runs across Japan,’ Nvidia’s Jensen Huang said Softbank Group Corp would be the first to build a supercomputer with chips using Nvidia Corp’s new Blackwell design, a demonstration of the Japanese company’s ambitions to catch up on artificial intelligence (AI). The group’s telecom unit, Softbank Corp, plans to build Japan’s most powerful AI supercomputer to support local services, it said. That computer would be based on Nvidia’s DGX B200 product, which combines computer processors with so-called AI accelerator chips. A follow-up effort will feature Grace Blackwell, a more advanced version, the company said. The announcement indicates that Softbank Group, which until early 2019 owned 4.9 percent of Nvidia, has secured a
RSS