Taiwan export orders fall for 8th month in June - GulfToday

Taiwan export orders fall in 8th consecutive month in June

Taiwan-Export

Ships seen at the Kaohsiung port in southern Taiwan. Reuters

Taiwan’s export orders contracted for an eighth straight month in June, with global companies increasingly hesitant to make new investments in machinery as the China-US trade war wears on.

Monday’s data showed a sharper drop in orders from China and Japan than the previous month, and a contraction from Europe, though US demand for Taiwan products rose for the first time in months, possibly due to supply chain adjustments.

Combined with a sharp drop in South Korea’s preliminary exports reported earlier in the day, the readings point to further strains on Asia’s trade-reliant economies in coming months, especially those which are highly reliant on sales of hi-tech electronics and memory chips.

Orders in June dropped 4.5 per cent from a year earlier to $38.5 billion, data from Taiwan’s Ministry of Economic Affairs showed.

That badly lagged a forecast of a 0.83 per cent decline in a Reuters poll of analysts, but was a slight moderation from a 5.8 per cent drop in May.

The ministry expects July export orders to decline 6.7-9.1 per cent on-year.

“Affected by the US-China trade spat, the global economy is softening and clients give their orders with a conservative and hesitant approach,” the ministry said in a statement.

International orders for machinery saw the largest drop, slumping 22.3 per cent, while electronics fell 4.3 per cent, though telecom products rose.

However, the ministry said orders could improve in the second half, thanks to rising demand for the fifth-generation telecommunications (5G) technology and as retailers prepare for the peak year-end shopping season, when major smartphone vendors are set to launch new products.

Taiwan’s hi-tech factories are major suppliers for global tech heavyweights such as Apple Inc and Qualcomm, and the continued drop in orders suggests global electronics could remain soft for some time.

Slowing global technology demand, the trade war and US restrictions on Chinese tech giants are taking a growing toll on Asia and its marquee manufacturers.

Chipmaker TSMC on Thursday posted a quarterly profit drop due to sluggish demand, but it gave an upbeat forecast for the coming months thanks to expected robust demand for 5G chips.

“The worse-than-expected orders in June were due to the beginning of the worsening U.S.-China trade spat in May,” said Jih Sun Securities economist Jordan Su.

But Su added that orders could return to growth in September-October if recently-resumed trade talks between the two sides show signs of progress.

Taiwan’s actual exports surprised by returning to growth in June, which the government attributed to Taiwan manufacturers moving parts of their supply chains back to the island as the Sino-U.S. trade dispute escalated.

June orders from the United States rose 6.8 per cent on-year, compared to May’s 2 per cent decline.

But demand from Taiwan’s other key markets deteriorated.

Orders from China dropped 14.6 per cent, compared with a fall of 13.9 per cent the previous month, while orders from European buyers slipped 5.3 per cent. Japan orders declined 7.9 per cent.

South Korea earlier on Monday reported its semiconductor exports tumbled 30.2 per cent in the first 20 days on July from a year earlier. Overall exports were down 13.6 per cent.

Reuters