UPDATE 1-Taiwan January export orders fall for 3rd month as China, US demand slump

25-Feb-2019 Intellasia | Reuters | 6:00 AM Print This Post

- Taiwan’s export orders contracted in January for a third straight month, adding to evidence of a global tech slowdown that will likely hit profits for the island’s many technology manufacturers this year.

Orders in January fell 6.0 percent from a year earlier to $40.49 billion, Ministry of Economic Affairs data showed on Friday.

The fall in January was in line with a median forecast of a 6.2 percent contraction in a Reuters poll. December orders dropped 10.5 percent from a year earlier, their steepest fall in more than two-and-a-half years.

Taiwan’s hi-tech factories make it a bellwether for global electronics demand, and the drop in orders last month suggests makers of smartphones and micro-chips are bracing for even slower sales.

The ministry said the decline was mainly due to weaker demand for smartphones and a high level of inventory in the semiconductor supply chain.

Launches of new smartphone models and growing demand for technology such as artificial intelligence, however, could support a recovery of orders for electronics, it said.

“We expect orders to return to year-on-year growth in the second quarter,” ministry official Lin Lee-jen said.

The ministry said it expects February export orders to decline by 1.4 to 4.5 percent from a year earlier.

January’s continued contraction of orders was in line with the gloomy short-term picture the island’s officials and major tech firms have given.

Last week, Taiwan’s government trimmed its 2019 economic growth forecast, citing growing uncertainties over global economic growth. It added that slowing demand for electronics, including smartphones, had “dealt an impact” to supply chain manufacturers.

Taiwan Semiconductor Manufacturing Co, the world’s largest contract chipmaker, last month forecast its sharpest revenue fall in a decade in the first quarter partly due to weak smartphone demand.

Taiwan’s January orders from the United States fell 5.3 percent from a year earlier, compared with December’s 5.6 percent rise.

Those from China dropped 14.1 percent, compared with a fall of 10.3 percent the previous month. Orders from Europe fell 1.4 percent and Japan dropped -2.1 percent.

Analysts expect the slowdown to continue in the coming months as Taiwan’s technology exports flounder amid a weaker global economy and the US-China trade war.

Masterlink Securities Investment Advisory economist Johnny Chiang said Taiwan’s export orders would remain weak in the first half, but a rebound in the global economy later this year could help lift the island’s exports.

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“A recovery in orders is only possible after the global economy recovers at the end of the third quarter to the fourth quarter,” he said.

ING economist Iris Pang said in a report on Friday that the outlook for Taiwan’s orders “won’t get better any anytime soon.”

“5G is a source of hope for the smart device product life cycle,” Pang said, referring to the next generation of wireless networks. “But this comes at the earliest by mid-2019. Until then, export orders will probably continue to be at risk.”



Category: Taiwan

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