TAIPEI: The nation’s industrial sector showed signs of a recovery last month, with output contracting at the slowest annual rate of 3.57 percent in eight months, the Ministry of Economic Affairs said yesterday.
That compares with an average annual contraction of 4.8 percent in the first two months of the year. It also followed a nascent improvement in the latest export order data released on Wednesday, which showed that orders for last month dropped 4.7 percent annually, beating the government’s forecast decline of 10 percent.
“A smaller decline is a sign of recovery. We are seeing a pickup in demand for mid-and-low-end mobile phones in emerging markets,” Department of Statistics Deputy Director-General Yang Kuei-hsien said at a news conference.
In addition, adoptions of new applications related to the Internet of Things are also rising and helping to boost semiconductor orders for local manufacturers, Yang said.
However, local manufacturers might continue to face difficult times as export demand softens, Moody’s analysts said.
“With global demand likely to remain subdued for sometime, export-oriented manufacturing will continue to come under downward pressure,” Moody’s economist Emily Dabbs said in a note yesterday.
The ministry’s latest data showed that industrial production declined on an annual basis for the 11th month last month.
Output by the manufacturing segment, which contributed more than 90 percent of the industrial sector’s total production, contracted by 4.16 percent last month from a year earlier, the slowest rate in eight months, the data showed.
The ministry attributed the improvement last month to a rapid restoration of chip production at Taiwan Semiconductor Manufacturing Co (TSMC) and growing chip demand. TSMC’s advanced chip production lines were briefly disrupted by a strong earthquake that hit Tainan on Feb. 6.
The electronic component segment, which accounted for a lion’s share of the manufacturing segment, saw output fall 4.02 percent year-on-year last month, decelerating from an annual reduction of 7.48 percent in February, the ministry’s data showed.
Yang attributed the decline to falling LCD panel orders, which shrank 13 percent year-on-year last month.
Local LCD panelmakers are facing twin challenges of weak demand and strong competition from Chinese peers, he said.
The decline in production of computers and optical products accelerated to 15.39 percent annually last month, from an annual decrease of 7.64 percent in February.
Demand worsened last month due to slowing growth of mobile phones and production cuts by local makers of mobile devices and optical products amid intensifying competition, the ministry said.
Machinery and equipment manufacturing output plunged 13.67 percent annually last month, faster than a 12.4 percent year-on-year drop in February, due to cautious investment in manufacturing equipment, such as machine tools, amid weak global demand.
The production of basic metals contracted by 4.22 percent last month, after a brief rebound in February, mainly because steelmaking production lines were under maintenance.
Overall, the ministry said last month’s improvement in industrial production bodes well for the sector this quarter and next.
The ministry expects manufacturing output to contract at a milder rate this quarter after last quarter’s 5.28 percent drop, adding that there is a higher chance that it would return to positive territory next quarter.
The semiconductor industry’s improvement is also expected to spread to the steel and petrochemical sectors next quarter, thanks to a rebound in global steel prices and an easing of petrochemical oversupply as some Asian manufacturers suspend or reduce operations for maintenance, the ministry said.
