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.
Former US president Jimmy Carter’s legacy regarding Taiwan is a complex tapestry woven with decisions that, while controversial, were instrumental in shaping the nation’s path and its enduring relationship with the US. As the world reflects on Carter’s life and his recent passing at the age of 100, his presidency marked a transformative era in Taiwan-US-China relations, particularly through the landmark decision in 1978 to formally recognize the People’s Republic of China (PRC) as the sole legal government of China, effectively derecognizing the Republic of China (ROC) based in Taiwan. That decision continues to influence geopolitical dynamics and Taiwan’s unique
Chinese Nationalist Party (KMT) Chairman Eric Chu (朱立倫) said that he expects this year to be a year of “peace.” However, this is ironic given the actions of some KMT legislators and politicians. To push forward several amendments, they went against the principles of legislation such as substantive deliberation, and even tried to remove obstacles with violence during the third readings of the bills. Chu says that the KMT represents the public interest, accusing President William Lai (賴清德) and the Democratic Progressive Party of fighting against the opposition. After pushing through the amendments, the KMT caucus demanded that Legislative Speaker
On New Year’s Day, it is customary to reflect on what the coming year might bring and how the past has brought about the current juncture. Just as Taiwan is preparing itself for what US president-elect Donald Trump’s second term would mean for its economy, national security and the cross-strait “status quo” this year, the passing of former US president Jimmy Carter on Monday at the age of 100 brought back painful memories of his 1978 decision to stop recognizing the Republic of China as the seat of China in favor of the People’s Republic of China. It is an
Beijing’s approval of a controversial mega-dam in the lower reaches of the Yarlung Tsangpo River — which flows from Tibet — has ignited widespread debate over its strategic and environmental implications. The project exacerbates the complexities of India-China relations, and underscores Beijing’s push for hydropower dominance and potential weaponization of water against India. India and China are caught in a protracted territorial dispute along the Line of Actual Control. The approval of a dam on a transboundary river adds another layer to an already strained bilateral relationship, making dialogue and trust-building even more challenging, especially given that the two Asian
RSS