The nation’s manufacturing industry is forecast to suffer an annual contraction of 5.05 percent in production value this year, as the COVID-19 pandemic depresses the global economy and consumer spending, the Industrial Technology Research Institute (ITRI, 工研院) said yesterday.
The manufacturing industry’s production value is forecast to drop to NT$18.59 trillion (US$620.7 billion) this year, compared with NT$19.58 trillion last year.
That dashed the research house’s hopes that the industry could return to positive growth of 1.28 percent, from an annual slump of 4.47 percent last year.
The manufacturing industry “is facing weakening demand from around the world amid a gloomy economic outlook,” ITRI senior researcher Patrick Liou (劉名寰) told a videoconference.
The information and communications technology sector is forecast to post 1.1 percent year-on-year growth to NT$7.1 trillion this year. Production value of the other three sectors is set to shrink on an annual basis, the institute said.
The semiconductor sector, the pillar of the information and communications technology segment, is forecast to post growth of as much as 5.7 percent year-on-year to NT$2.81 trillion, the institute said, with foundry companies posting 7.3 percent annual growth.
Lockdowns implemented by most nations due to the coronavirus have increased demand for servers, game consoles, laptops and PCs for remote learning and working from home, and 5G deployments, it said.
The nation’s semiconductor companies would also benefit from the US government’s latest curbs on Huawei Technologies Co (華為) accessing the technology of non-US companies, ITRI senior researcher Jiang Bor-Feng (江柏風) said.
Taiwan Semiconductor Manufacturing Co (台積電), a major chip supplier to Huawei, has reportedly received a rush US$7 billion order from the Chinese technology company, which is trying to stockpile as many as chips as possible during a 120-day grace period granted by Washington.
Chip designers are expected to post 4.3 percent annual growth on the expectation that Huawei could turn to MediaTek Inc (聯發科) for its supply of chips, the institute said.
However, Jiang warned that the positive effect could be short-lived as the US-China trade dispute might wreak a havoc with the global supply chain.
The petrochemical segment is set to suffer the steepest contraction, a year-on-year decline of 16.36 percent to NT$3.81 trillion, as crude oil prices are likely to remain on a downward trajectory this year, it said.
Crude oil prices are set to tumble about 48 percent year-on-year to US$33 per barrel, the institute added, citing a forecast by the International Energy Agency.
The base metals and machinery segment, which is mainly comprised of steelmakers and machine tool makers, is forecast to post a 4.62 percent year-on-year decline to NT$5.24 trillion.
The livelihood segment — which includes restaurants and tourism businesses — is expected to post a 2.69 percent year-on-year decline to NT$2.44 trillion, due to reduced activity and fewer foreign tourists amid the pandemic, the institute said.
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