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Manufacturing value to increase by 3.19% this year [GCTL Insights Magazine (China)]
[August 03, 2014]

Manufacturing value to increase by 3.19% this year [GCTL Insights Magazine (China)]

(GCTL Insights Magazine (China) Via Acquire Media NewsEdge) TAIPEI, Aug 4 (GCTL) - The output value of the nation's manufacturing sector is forecast to grow 3.19 percent to NT$17.75 trillion (US$592.26 billion) this year from last year, thanks to a moderate recovery in the global economy, the Industrial Technology Research Institute (ITRI) said on Wednesday.

The forecast — higher than the 3.1 percent increase to NT$17.73 trillion the institute predicted in April — is mainly led by 17.1 percent annual growth in the output value of the semiconductor sector, ITRI researcher Jim Chung told a press conference in Taipei.

That growth could exceed NT$2 trillion amid strong demand for handsets, PCs and LCD TVs around the world, Chung said.

"There is no such issue of market saturation for semiconductor companies in the next decade," Taiwan Semiconductor Industry Association (TSIA) director-general Nicky Lu said,Taipei Times reported.

"Semiconductor applications will instead become more diverse because of the Internet-of-Things trend, and that means there will be a lot more opportunities for Taiwan's semiconductor industry," he said.

The output value of the nation's semiconductor industry grew 15.2 percent to US$72 billion last year from 2012, according to the institute.

However, it sees the industry as remaining prosperous for no more than two years because pricing competition in the smartphone and tablet markets is intensifying, which will diminish the profitability of brand vendors and component makers.

Since more than 45 percent of Taiwanese semiconductor manufacturers' products or services are tailor-made for clients, they rely heavily on the overall mobile device market for profit, the institute said.

These firms should act fast to develop new manufacturing technologies to stay competitive against their South Korean and Chinese rivals in the long term, it said.

Meanwhile, the local manufacturing sector might see its output value contract by between 1.59 percent and 3.85 percent this year, if Taipei and Beijing fail to ink a cross-strait agreement on trade in goods ahead of China's signing of a free-trade agreement (FTA) with South Korea, ITRI said.

The contraction is likely to emerge in three to five years following the signing of the planned FTA by the end of the year, with potential losses of between NT$260 billion and US$650 billion, senior researcher Cheng Chih-chiang said.

"We need to accelerate talks with China on signing trade agreements. Otherwise, Taiwanese firms had better develop higher-quality products to enhance their competitiveness, while their South Korean peers enjoy lower tariff rates that are promised in the FTAs," Cheng said.

The institute said that uncertainties for the manufacturing sector in the second half of the year include potential monetary policy changes in the US and Europe as well as the political unrest in the Middle East.

(c) 2014 FocusAsia Media Ltd. All Rights Reserved. Provided by SyndiGate Media Inc. (

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