The nation’s industrial production contracted 15.73 percent year-on-year last month, marking a 12-month losing streak, as sluggish market demand curtailed the production of chips, flat panels and other electronic parts, the Ministry of Economic Affairs said yesterday.
The industrial production index fell to 85.03 last month, while the production index of manufacturing, which is a major contributor to Taiwan’s industrial production, dropped by 16.42 percent annually to 84.22, the ministry’s statistics showed.
In the first five months, industrial production dropped by 17.78 percent and manufacturing production decreased 18.53 percent from the same period last year, data showed.
Photo: Ritchie B. Tongo, EPA-EFE
The ministry expects manufacturing production to extend the downtrend this month, down by 16.8 percent to 20.8 percent, as prospects for end-market demand remains bleak.
“Though this month’s decline could be less severe than the previous month’s, it is still too early to say that the worst is over. The key is how soon people will resume spending on consumer electronics,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.
“As the US and European central banks signaled more interest rate hikes to come amid sticky inflation, consumers may continue feeling the pinch and be cautious with spending in the short term,” Huang said.
However, the ministry has seen some bright spots.
“We saw significant improvement in supply chain inventory in May, with inventory dropping rapidly to the levels of May last year, though it is still higher than the pre-pandemic levels. Semiconductor and flat panels outperformed other segments,” Huang said, citing the preliminary analysis conducted by the ministry.
The ministry is hoping that launches of new smartphones by the world’s major brands in the second half of this year will help recoup some lost strength, he said.
Last month, the production of electronic components plunged to 24.4 percent from a year earlier, with semiconductor output falling to 25.89 percent, and that of flat panels tumbling to 22.87 percent, the ministry’s data showed.
Computers and optical component production slid by 0.8 percent last month from a year earlier, as weak economic growth and consumer spending curtailed demand for semiconductor testing services and camera lenses used in smartphones, while demand for servers and switches showed robust growth, the ministry said.
The production of basic metals declined by 21.09 percent last month due to fierce price competition in the steel market, where steelmakers shut down factories for maintenance and cut production, the ministry said.
The petrochemicals sector saw production contract by 20.29 percent last month on the back of stagnant demand and ongoing inventory digestion, while the output of machinery makers plunged by 12.2 percent as most companies slowed down capacity expansion, it said.
However, the automobile segment posted a growth of 29.44 percent in production last month, thanks to inventory rebuilding demand for automotive parts, and a relatively lower comparison base a year ago, the ministry said.
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