Taiwan’s export orders are on track to return to growth this year, driven mainly by the artificial intelligence (AI) boom, snapping two years of declines. Orders are expected to expand up to 4.3 percent annually to about US$539.35 billion this year amid thriving demand for AI chips and AI servers, the Ministry of Economic Affairs said.
However, the focus on the technology sector and a capricious external environment spell trouble for this key economic indicator.
Taiwan is heavily reliant on the technology sector for growth, even though traditional sectors such as basic metals, machinery equipment and chemical products have emerged from a deep slump. About 68 percent of the nation’s export orders in the first 10 months of this year, valued at US$554.5 billion, came from electronic products, chips primarily, and information and communication technology (ICT) devices. In 2014, ICT and electronic products made up about 52 percent of overall export orders, ministry data showed.
Last month, the US accounted for more than 30 percent of ICT product orders and more than 40 percent of electronic products orders, the data showed. That means any trade policy changes that the incoming administration of US president-elect Donald Trump introduces would affect Taiwan.
Manufacturers and exporters are bracing for protectionist trade policies under Trump’s “make America great again” ideals, among which is to boost US manufacturing by imposing tariffs of at least 10 percent on foreign companies, depending on the country.
To address the issue, local manufacturers are adopting an agile stance and are cautiously managing their overseas production sites. Any setbacks in supply chain management might result in losses in new orders, which would have a knock-on effect on Taiwan’s economy.
Hon Hai Precision Industry Co, the world’s biggest electronics manufacturer, last week said that it planned to expand production capacity of AI servers based on Nvidia Corp’s Blackwell chips in Taiwan, the US and Mexico to cope with rising demand. Another Nvidia server supplier, Wistron Corp, also said it did not rule out making servers in the US, “if it is necessary.” Wistron is boosting capacity at its Mexico factory to cope with rapid increases in orders.
For Taiwan’s traditional sectors, it is a different story. Companies are struggling to get out of the woods, given sluggish demand from China, the biggest export destination for local producers of chemical, petrochemical and machinery products.
Moreover, Chinese rivals are nibbling away at Taiwan’s — and everyone else’s — share of the global market by exporting as much as possible at lower prices amid poor domestic demand.
Export orders for rubber, chemical and machinery products made in Taiwan have fallen well behind technology products, the ministry data showed.
Although Beijing has launched economic stimulus packages, it is unclear whether they would revive its economy, so Taiwanese firms are seeking to diversify their markets, including by expanding their presence in the US, Southeast Asia and Europe, the ministry said.
However, it would take time to make significant progress, as local firms do not benefit from lower tariffs as global peers do in the absence of free trade pacts between Taiwan and many other countries.
With technology companies facing rising uncertainty as Trump prepares to re-enter the White House amid a slow recovery in traditional sectors, Taiwan’s economy faces a bumpy road. As most companies in the traditional sectors are small or medium-sized, they need more government aid and resources to deal with the situation. The government also needs to ponder how to rebalance the economy.
Why is Chinese President Xi Jinping (習近平) not a “happy camper” these days regarding Taiwan? Taiwanese have not become more “CCP friendly” in response to the Chinese Communist Party’s (CCP) use of spies and graft by the United Front Work Department, intimidation conducted by the People’s Liberation Army (PLA) and the Armed Police/Coast Guard, and endless subversive political warfare measures, including cyber-attacks, economic coercion, and diplomatic isolation. The percentage of Taiwanese that prefer the status quo or prefer moving towards independence continues to rise — 76 percent as of December last year. According to National Chengchi University (NCCU) polling, the Taiwanese
It would be absurd to claim to see a silver lining behind every US President Donald Trump cloud. Those clouds are too many, too dark and too dangerous. All the same, viewed from a domestic political perspective, there is a clear emerging UK upside to Trump’s efforts at crashing the post-Cold War order. It might even get a boost from Thursday’s Washington visit by British Prime Minister Keir Starmer. In July last year, when Starmer became prime minister, the Labour Party was rigidly on the defensive about Europe. Brexit was seen as an electorally unstable issue for a party whose priority
US President Donald Trump is systematically dismantling the network of multilateral institutions, organizations and agreements that have helped prevent a third world war for more than 70 years. Yet many governments are twisting themselves into knots trying to downplay his actions, insisting that things are not as they seem and that even if they are, confronting the menace in the White House simply is not an option. Disagreement must be carefully disguised to avoid provoking his wrath. For the British political establishment, the convenient excuse is the need to preserve the UK’s “special relationship” with the US. Following their White House
US President Donald Trump’s return to the White House has brought renewed scrutiny to the Taiwan-US semiconductor relationship with his claim that Taiwan “stole” the US chip business and threats of 100 percent tariffs on foreign-made processors. For Taiwanese and industry leaders, understanding those developments in their full context is crucial while maintaining a clear vision of Taiwan’s role in the global technology ecosystem. The assertion that Taiwan “stole” the US’ semiconductor industry fundamentally misunderstands the evolution of global technology manufacturing. Over the past four decades, Taiwan’s semiconductor industry, led by Taiwan Semiconductor Manufacturing Co (TSMC), has grown through legitimate means
RSS