Business sentiment last month declined across sectors and is not expected to improve in light of escalating uncertainty, the Taiwan Institute of Economic Research (TIER, 台灣經濟研究院) said yesterday.
The confidence gauge among local manufacturers shed 0.43 points to 84.2, the lowest since May 2020, shrinking for 10 straight months, the Taipei-based think tank said, citing a monthly survey.
“The worst is yet to come, likely in the first half of next year, as downside risks are really very high,” TIER president Chang Chien-yi (張建一) said, citing high inflation in the US, global monetary tightening, geopolitical conflicts and China’s tight COVID-19 controls.
The US and China account for more than 50 percent of Taiwanese exports.
The US Federal Reserve might sound less hawkish, but is likely to press ahead with interest rate hikes until consumer prices come under control at around 2 percent, from 7.7 percent last month, Chang said.
Monetary tightening has chilled consumer spending, as evidenced by tepid sales of technology products, the mainstay of Taiwan’s exports, the economist said.
About 40 percent of electronics and machinery suppliers have a negative view about business in the next six months, as international customers seek to avoid overdependence on Taiwan by diversifying supply sources amid US-China technology competition, TIER said.
What matters most is whether China would continue its “zero-COVID-19” policy that is suffocating economic activity, Chang said.
Taiwan would see medium inflation and low GDP growth next year, supported mainly by domestic demand, as loosened disease controls can allow tourism and hospitality sectors to emerge from the COVID-19 pandemic, TIER economist Gordon Sun (孫明德) said.
Some manufacturing sectors could come out of the woods in the second quarter of next year after active inventory digestion, Sun said.
If China eases its strict COVID-19 curbs, revenge consumption could follow and push up inflation, a scenario that also merits caution, Sun said.
The sentiment reading for service sectors lost 3.65 points to 91.09, as logistics and warehousing operators, and securities houses and insurance companies took a hit from an economic slowdown, TIER said.
By contrast, restaurants, hotels, travel agencies and retailers are looking at business pickup, it said.
The confidence measure for the construction industry dropped 5.24 points to 85.1, as softening property sales weighed on new construction contracts despite the government’s promotion of green public projects, it found.
Private engineering firms and developers generally hold neutral views about business in the coming six months, it 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
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
TECH SECURITY: The deal assures that ‘some of the most sought-after technology on the planet’ returns to the US, US Secretary of Commerce Gina Raimondo said The administration of US President Joe Biden finalized its CHIPS Act incentive awards for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), marking a major milestone for a program meant to bring semiconductor production back to US soil. TSMC would get US$6.6 billion in grants as part of the contract, the US Department of Commerce said in a statement yesterday. Though the amount was disclosed earlier this year as part of a preliminary agreement, the deal is now legally binding — making it the first major CHIPS Act award to reach this stage. The chipmaker, which is also taking up to US$5 billion
RSS