Fixed asset purchases, excluding land, by the manufacturing sector in the first quarter fell 3.2 percent year-on-year to NT$467.8 billion (US$15.23 billion), the Ministry of Economic Affairs said in a report on Monday.
The slowdown came as manufacturers reduced spending in a reflection of weakening end-market demand, while semiconductor companies also reduced or suspended capital expenditure amid an industry downturn, the ministry said, adding that the drop was also because of a relatively high comparison base last year.
Fixed assets include machinery and other types of equipment, buildings and construction projects, as well as furniture, fixtures and vehicles.
Photo: Ritchie B. Tongo, EPA-EFE
The decline in purchases in the first quarter followed a 16 percent increase to NT$682.9 billion a quarter earlier, but hopefully continued green energy construction and the implementation of investment projects by firms returning to Taiwan would help boost investment momentum in the manufacturing sector, the ministry said.
However, as negative factors such as inflation, rate hikes, Russia’s war in Ukraine and the US-China technology spat persist, manufacturers would remain cautious regarding capital expenditure, it said.
The electronic components industry topped other industries in the January-to-March period with purchases of NT$317.9 billion of fixed assets, accounting for 68 percent of all purchases by local manufacturers, the ministry’s report showed.
However, the figure was 10.4 percent lower than a year earlier as demand for consumer electronics continued to be weak and investments by semiconductor companies slowed, the ministry said.
The chemical materials industry was second in terms of fixed-asset purchases.
It spent NT$25.8 billion, up 29.3 percent year-on-year, as some firms expanded production lines and replaced equipment, while others boosted capital expenditure on projects related to energy conservation, carbon reduction and a circular economy, the ministry said.
In third, the metal products industry posted fixed-asset purchases of NT$11.9 billion, down 4.9 percent year-on-year due to a higher comparison base last year, even though local suppliers to the wind power industry continued to invest to partially offset some reductions in fixed-asset purchases, the ministry said.
The computer and optoelectronics industry reported a 4.7 percent decrease in purchases to NT$11.5 billion due to weak market demand, it said.
However, the machinery equipment, oil and coal production, and base metal industries reported increased purchases of 16.1 percent to NT$9.3 billion, 30.1 percent to NT$11.4 billion and 24.6 percent to NT$11.5 billion respectively, as firms continued to expand and upgrade production facilities, it said.
Separately, total revenue brought in by the manufacturing sector, including overseas production, in the first quarter declined 11.1 percent annually to NT$4.37 trillion, as firms lowered their shipments amid a slowdown in global economic growth and due to continued supply chain inventory adjustments, the ministry said.
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