Taiwanese manufacturers, especially chipmakers and electronics assemblers, have long touted themselves as their customers’ best partners and suppliers, given their resourceful workforces and flexible manufacturing capacity. They once again proved their ability to perform well by overcoming geopolitical tensions and COVID-19 restrictions, as reflected in last month’s export orders, which grew at a more rapid pace than industry insiders predicted.
Taiwan’s exports expanded for a 24th consecutive month to US$51.56 billion last month — the best February figure ever. That represented growth of 21 percent from the same period a year earlier, beating an estimate of 9 percent by the Ministry of Economic Affairs. The growth was supported by robust demand, primarily for smartphones, notebook computers and chips used in 5G smartphones, high-performance computers and vehicles.
Nearly 51 percent of goods sold in Taiwan were produced at factories overseas last month, up 1.6 percentage points from a year earlier, while more than 90 percent of smartphones and electronics were produced overseas, ministry statistics showed.
To ensure growth momentum and satisfy customer demand, some major electronics companies, mainly chipmakers, are accelerating investment in manufacturing facilities in Europe and Southeast Asia to protect against possible production and supply disruptions caused by geopolitical tensions.
Hon Hai Precision Industry Co, a major iPhone assembler, said that it expects the most recent lockdown order by the Shenzhen City Government to have a limited effect on business as it is allocating manufacturing capacity elsewhere.
Compal Electronics Inc, the world’s No. 2 contract notebook computer maker, also expects minimal disruption as it operates other major manufacturing sites in China. Compal is also building new manufacturing capacity in Vietnam, which presently contributes up to 20 percent of its total capacity.
With global demand rising and transportation costs soaring, silicon wafer supplier GlobalWafers Inc last week said that it would build a new 12-inch wafer manufacturing fab in Italy for about NT$55 billion (US$1.93 billion), with the aim of supplying chips to its European customers, most likely German vehicle chip suppliers. As the world’s third-largest silicon wafer supplier, it also plans to spend NT$45 billion on expanding capacity at manufacturing sites in Taiwan and overseas.
United Microelectronics Co (UMC), the world’s No. 3 foundry contract chipmaker, said it plans to spend US$5 billion on a new production facility in Singapore to make 22-nanometer chips amid unresolved supply chain constraints caused by robust demand for 5G applications, Internet-of-Things devices and vehicles. It is UMC’s first major investment in Singapore in about 20 years. Speculation swirled yesterday that UMC was considering whether to build a new factory in US vehicle manufacturing hub Detroit to make chips for vehicles, and participate in Washington’s policy to boost US semiconductor self-sufficiency. If it did so, it would follow in the path of Taiwan Semiconductor Manufacturing Co.
Despite new overseas capacity being planned, local manufacturers are still faced with rising uncertainty and mounting risks of raw material supply constraints, along with surges in transportation costs. Ukraine supplies 40 percent of the world’s neon, and a ninefold increase in neon prices has been caused by the war. The unresolved chip crunch could worsen if neon supply becomes tight. High inflation is also likely to dampen consumers’ demand for electronics and non-essential items.
It seems that local companies dealing with an ever-changing world is the new norm, as they juggle between customer demand and supply chain constraints.
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