More than 50 percent of export orders received by Taiwanese firms were fulfilled by local production facilities last year, the highest level on record, the Ministry of Economic Affairs (MOEA) said.
Data compiled by the ministry’s Department of Statistics released on Friday showed that 50.1 percent of goods exported by local firms were produced in Taiwan, a year-on-year increase of 1.7 percent.
The ministry said the higher ratio came as strong demand for emerging technologies such as 5G, high-performance computing and automotive electronics boosted production by Taiwan’s pure wafer foundry operators, and integrated circuit (IC) packaging and testing services providers.
Photo: Sam Yeh, AFP
Taiwan accounts for about 90 percent of high-end chip production globally, with Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and ASE Technology Holding Co (日月光投控) the world’s largest contract chipmaker, and IC packaging and testing firms, respectively.
In addition, Taiwanese servers and Internet communications suppliers also saw their overseas demand growing by allocating local production lines to meet the demand, the ministry said.
Meanwhile, 39.2 percent of goods exported by Taiwanese companies last year were produced in China and Hong Kong, down from 42.4 percent in 2021 and the first time the figure has dropped below 40 percent since ministry records began in 2011.
Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said the fall largely resulted from China’s strict COVID-19 controls, while falling global demand for notebook computers and flat panels produced by Taiwanese suppliers in China also dragged down the ratio.
The data showed that products made in ASEAN countries in facilities owned by Taiwanese exporters fulfilled 4.6 percent last year, up from 3.2 percent in 2021. The figure is ahead of 3.9 percent in Taiwanese firms’ production lines located in Europe and the US last year, which rose from 3.5 percent in 2021.
It was the first time that the ratio in ASEAN countries topped that in Europe and the US, the ministry said.
Huang said the figures indicated escalating trade tensions between the US and China prompted many Taiwanese manufacturers to shift their production to ASEAN countries.
Huang added that firms had also been encouraged to relocate by the government’s New Southbound Policy, which seeks to enhance trade and exchanges between Taiwan and 18 countries in Southeast and South Asia, as well as Australia and New Zealand.
Kristy Hsu (徐遵慈), director of Taiwan ASEAN Studies Center under the Chung-Hua Institution for Economic Research, agreed, saying the trade conflicts between Washington and Beijing led to a decline in production capacity owned by Taiwanese firms in China.
Some of these firms have even placed more of their resources to cater to the Chinese domestic demand-oriented services and property markets from the export-oriented manufacturing sector, she said.
Dachrahn Wu (吳大任), director of the Research Center for Taiwan Economic Development at National Central University, said China remained an important production base in the world, as Chinese exporters still sold about US$300 billion of goods to the US market and more than US$30 billion of goods to Taiwan a month.
It is not easy for Taiwanese manufacturers to give up their production in China in the short or medium term, while the long-term established production systems by Taiwanese companies still led many Taiwanese firms to stay, Wu said.
The size of the Chinese market also served as a factor for many Taiwanese manufacturers to continue to produce there, he said.
Still, Wu said many Taiwanese firms have followed Apple Inc’s lead to prepare themselves for an alternative production site in addition to China, adding that Vietnam and Indonesia have become their favored destinations.
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