The nation’s technology sector is heading toward a cyclical recovery in the second half of this year and into next year as export orders for electronic components rebound, DBS Bank Ltd said in a report on Tuesday.
Data released last week by the Ministry of Economic Affairs showed that export orders for electronic components, primarily semiconductors, last month shrank 0.4 percent year-on-year to US$17.7 billion.
While it marked the ninth consecutive month of annual declines, the drop at the start of the third quarter was notably less severe than the average 20.2 percent fall observed in the second quarter, indicating that external demand for Taiwan-made electronic components has begun to improve, DBS said.
Photo: Ritchie B. Tongo, EPA-EFE
The decline in demand from China, among the nation’s major export markets for electronic components, moderated as of last month and demand from ASEAN markets increased, while a deeper contraction continued for Japan and South Korea, it said.
Other factors that were conducive to the tech sector’s nascent recovery included a reduction of excess inventories, a stabilization in chip prices, a gradual pickup in demand for commercial PCs and smartphones, and increased investments in products used in artificial intelligence (AI) applications, it added.
Global PC shipments are forecast to grow 3.7 percent year-on-year to 261.4 million units next year, after an estimated decline of 13.7 percent to 252 million units this year, the International Data Corp (IDC) said in its Worldwide Quarterly PC Tracker report on Monday.
Meanwhile, worldwide smartphone shipments declined 6.8 percent annually to 268 million units in the second quarter of the year, the eighth consecutive quarter of contraction, IDC said in its Worldwide Quarterly Mobile Phone Tracker report on Aug. 11. While the market is still struggling with soft demand, inflation, macroeconomic uncertainties and excess inventory, the pace of decline last quarter was slowing compared to previous quarters, IDC said.
Moreover, semiconductors designed to execute AI workloads would present a revenue opportunity for the semiconductor sector this year, as the adoption of ChatGPT is spurring investments in generative AI, DBS said.
“Taiwan is poised to be an immediate major beneficiary of AI investments,” Singapore-based DBS economist Ma Tieying (馬鐵英) said in the report, referring to Taiwanese foundries led by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) as dominating about 90 percent of the global production of advanced logic chips under 10 nanometers.
With its leading-edge technology capacity and mature-node technologies, TSMC has already secured a substantial share of AI chip orders from Nvidia Corp and Advanced Micro Devices Inc, Ma said.
Meanwhile, Microsoft Corp, Alphabet Inc’s Google, Amazon.com Inc and Facebook owner Meta Platforms Inc are reportedly pursuing custom AI chip development, which would also leverage TSMC’s advanced nodes for fabrication, she said.
However, potential risks persist — including a global macroeconomic slowdown, escalating US-China tensions, continued monetary tightening in the West and an economic slump in China — which would exert pressure on global demand for end devices and weigh on Taiwan’s electronic component exports, the report said.
Moreover, if Washington is to implement more restrictive measures to limit China’s access to chips for AI, the move could generate additional negative effects on global semiconductor trade and potentially disrupt the expected tech recovery ahead, it added.
DBS maintains its GDP growth projections for Taiwan at 0.5 percent this year and 3.5 percent next year, the report said.
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
INDUSTRY LEADER: TSMC aims to continue outperforming the industry’s growth and makes 2025 another strong growth year, chairman and CEO C.C. Wei says Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
RSS