TAIPEI Aug 20 The launch of new tech products
such as Apple's iPhone 6 will help Taiwan remain one of Asia's
stronger exporters, bolstering its economic prospects this year
amid a patchy global recovery.
After the government raised Taiwan's GDP outlook for 2014
last week, export orders on Wednesday will provide more evidence
that prospects have improved for the trade-reliant economy. A
manufacturing survey in July showed new export orders grew at
their fastest rates since January 2011.
Taiwan's upgrade of economic growth estimates is unusual at
a time when its North Asian neighbours are downgrading forecasts
and rolling out stimulus measures to prop up growth.
The island's export orders in July are expected to grow 7.3
percent from a year earlier, a Reuters poll of analysts showed.
That would moderate from a 10.6 percent rise in June, which far
exceeded estimates and was the fastest pace in 1-1/2 years.
Underpinning the stronger momentum is the upcoming launch of
the latest smartphone from Apple Inc, expected in the
fall. Taiwan firms will be manufacturing a bulk of components
and accessories for the new device.
"You usually don't hit critical mass until about 3-6 months
after the launch," said Wai Ho Leong, regional economist at
Barclays Capital in Singapore. Demand will gradually build up
and is first reflected in orders and then actual exports.
The tech industry, the main driver of Taiwan's export
machine, has been facing upheaval from changing consumer tastes
worldwide as bulky computers give way to handheld devices.
Adapting to the shift in trends, many of Taiwan's contract
manufacturers produce high-end chips that power new generation
smartphones and other digital gadgets.
Economists expect momentum to sustain through the second
half of the year although it may be too soon to tell how much
the orders will translate into actual exports. Export order data
includes those from Taiwan-owned factories abroad, such as in
mainland China, while exports capture only domestic shipments.
BETTER THAN RIVALS
While manufacturing slows in South Korea and Japan,
Taiwanese producers have signalled a robust improvement in
overall business conditions. Manufacturers are
hopeful recovering growth momentum in the United States will
help to counter a slowdown in China and soft economic conditions
The pick-up in activity led Taiwan's statistics agency to
raise its forecast for the island's economic growth this year,
citing a healthy outlook for its semiconductor industry because
of external demand in mobile devices.
China and Hong Kong together receive about 40 percent of
Taiwan's exports while the United States is the next largest
destination for Taiwanese goods. Many Taiwanese companies
produce and assemble goods in their plants located in China,
which are then exported from the mainland.
Taiwan's export orders are seen as a leading indicator of
demand for Asia's exports and hi-tech devices, and typically can
lead actual exports by two to three months. But just-in-time,
quick turnaround manufacturing in the competitive consumer
electronics sector means July orders likely won't fully reflect
coming demand for new products.
Tieying Ma, economist at DBS in Singapore, cited base
effects from last year as a reason for the growth slowdown in
July, but she sees order levels staying strong even if annual
gains for the rest of the year fall between 5 and 8 percent.
June orders totalled US$38.8 billion, a monthly level that
has been largely sustained for the past four months running.
Taiwan-made semiconductors are a critical part of the global
technology supply chain and are found in machinery and
electronic products, as well as consumer electronic goods.
Jimmy Chen, an analyst at Masterlink Securities in Taipei,
said that these chips and the components that make up handheld
mobile devices have been the main drivers for orders.
Chen said he expects smartphone-related demand to begin
showing up in August sales figures for local companies and
continue through October and November.
(Editing by Jacqueline Wong)