The industrial production index fell 12.45 percent annually last year after it fell by a faster-than-expected 3.99 percent last month amid a shortage of artificial intelligence (AI) chips from Nvidia Corp, which curtailed server production, while inventory adjustments at foundry and printed circuit board firms continued, the Ministry of Economic Affairs said yesterday.
The index gauges output in Taiwan’s four main industries: manufacturing, electricity and gas supply, water supply, and mining and quarrying.
The manufacturing production index, which contributed 95.41 percent to the industrial production index, dropped 4.19 percent annually last month, the 19th month of consecutive falls, a record, the ministry said.
Photo: Ritchie B. Tongo, EPA-EFE
Last month’s decline meant that the manufacturing index was down 12.88 percent last year, down for a second consecutive year and the severest slump on record, it said.
The production index for electricity and gas supply dropped 3.7 percent from a year earlier, while the indices for water supply, and mining and quarrying were down 2.15 percent and 3.47 percent respectively, it said.
The ministry has a more optimistic view about industrial and manufacturing output this year, due to robust demand prospects for semiconductors and servers, Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.
Taiwan Semiconductor Manufacturing Co (台積電), the world’s biggest contract chipmaker, last week forecast that revenue this year would grow to as much as 25 percent annually, outperforming the global semiconductor industry’s expected expansion of 10 percent.
“A rebound in demand for semiconductors will be one of the major driving factors” of the global situation, Huang said.
“Smooth server shipments will be another as Chinese output of less-advanced artificial-intelligence chips increases and supply chain inventory digestion nears an end,” he said, adding that semiconductors and servers make up more than 40 percent of overall manufacturing production.
This month, the manufacturing production index is expected to grow by 9.6 to 14.7 percent due to a nascent economic revival and a lower comparison base last year, he said.
However, the Red Sea crisis poses a new concern, given that longer transportation times and higher shipping costs would lead to higher prices, reigniting inflation risks, and weighing on export orders and manufacturing output, he said.
Last year, electronic components production — which mainly comprises semiconductors and flat panels used in PCs and TVs — plummeted 17.39 percent annually, while the production of computers and optical components, mainly camera lenses, dropped 0.19 percent from the previous year, ministry data showed.
Output of base metals, including steel, fell 9.48 percent and output of petrochemicals sank 11.82 percent, while machinery output fell 17.35 percent and automotive-related products were down 1.06 percent annually last year, the data showed.
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