Taiwan’s manufacturing output in the second quarter fell 19.57 percent year-on-year to NT$4.21 trillion (US$131.8 billion) as manufacturers’ capacity utilization remained under pressure from weakening end-market consumption, decelerated investment momentum and continuous inventory adjustments, the Ministry of Economic Affairs said in a statement on Friday.
It was the third consecutive quarter of annual decline following a fall of 13.59 percent in the first quarter of the year and a decline of 5.73 percent in the fourth quarter of last year, as firms in the technological as well as traditional industries continued to face headwinds amid a slowdown in the global economy, the ministry said.
The outlook for the domestic manufacturing sector is still being weighed down by the effects of global inflation and monetary tightening, as well as the conflict between Russia and Ukraine and US-China technology disputes, it said.
Photo: Ritchie B. Tongo, EPA-EFE
However, potential business opportunities related to high-performance computing, artificial intelligence and automotive electronics, coupled with launches of new consumer electronics, could help inject some growth momentum into the local manufacturing sector in the second half of the year, it added.
During the April-to-June quarter, the electronic components industry — the manufacturing sector’s most important segment, with a share of 28.72 percent in the sector’s total output — saw production value decrease by 22.7 percent to NT$1.21 trillion last quarter, driven mainly by a fall of 25.2 percent in semiconductor industry output to NT$704.3 billion amid weakening demand for electronic products and persistent inventory adjustments, ministry data showed.
In addition, LCD panel makers reported a 14.02 percent decline in output to NT$136.9 billion due to weakening demand for new applications and falling prices compared with a year earlier, while suppliers of computers and optical products also saw output drop 3.38 percent to NT$261 billion as consumption shrank, although the decrease was better than expected thanks to solid demand for servers and networking equipment, the ministry said.
In traditional industries, producers of chemical materials and fertilizers last quarter posted a decline of 35.99 percent year-on-year to NT$383.4 billion, while suppliers of base metals reported that their output declined 27.36 percent to NT$380.2 billion. Output at makers of machinery equipment decreased by 16.59 percent to NT$220.6 billion.
The declines mainly reflect the effects of a slowing global economy, the ministry said, adding that manufacturers implementing annual maintenance and reducing capacity utilization while customers kept up inventory destocking, coupled with a decreased willingness to invest, were also factors behind the fall in production.
In comparison, the automobile and vehicle parts industry’s output grew 10.7 percent year-on-year to NT$127 billion last quarter, the fourth straight quarter of annual increase, on the back of a steady supply of auto chips and components, as well as strong sales of several new car models and higher component prices compared with a year earlier, it said.
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