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Taiwan July exports pick up on tech demand, but lag forecast

By: | at 04:24 PM | Channel(s): International Trade  

Taiwan’s export growth accelerated in July, as the island’s tech supply chain ramped up for expected fall releases of products such as the new iPhone from Apple Inc.

Growth came in slightly below expectations, but one analyst said momentum remained solid particularly boosted by strengthening imports.

The spillover effect from the new iPhone should keep the export trend strong going into the second half of the year, the government has said. The trade-reliant economy shifted into high gear after posting its fastest annual pace of growth in 1-1/2 years in the second quarter.

“The import figure is a good sign that investment in machinery to make products for re-export remains strong,” said analyst Anita Hsu of Masterlink Securities in Taipei.

Exports in July rose 5.8 percent from a year earlier, the island’s Ministry of Finance said on Thursday, below expectations for a 6.98 percent gain from a Reuters poll. It posted a 1.2 year-on-year growth in June.

Imports in July rose a strong 9.5 percent from a year earlier, on the heels of 7.5 percent growth in June.

“The holiday periods coming up in mainland China, Europe and the U.S. will continue to act as a positive driver for exports in the second half of the year,” the ministry said in a statement. “But international competition is heating up and instabilities in the pace of growth among emerging markets may act as constraints on export growth,” it added.

Exports of semiconductors, including those used in iPhones and other smart devices, reached $6.22 billion, a record monthly high, in July. This sub-category of exports accounted for around 23 percent of total exports in July, said Yeh Maan-Tzwu, director general of the ministry’s statistics department.

Export figures have routinely undershot expectations in recent months, with both May and June coming below predictions.

Export orders, on the other hand, have been surging, handily beating expectations in June.

Exports only measure those from Taiwan’s domestic facilities, while orders also include those placed in Taiwan-owned factories overseas.

Exports to China, Taiwan’s largest trading partner, grew 6.5 percent in July, more than the 3.4 percent growth in the previous month. Those to the United States were up 2.4 percent in July, slowing from an 11.8 percent growth pace in June.

Exports to Japan fell 1.9 percent, while those to Europe rose 8.9 percent.

Positive Signs

The expected release of a new large-screen iPhone this fall should benefit Apple’s suppliers and assemblers, dozens of whom are based in Taiwan, although the tech giant has said its third-quarter revenue growth will likely slightly undershoot market forecasts.

Other readings of economic health have pointed to firming growth in both Taiwan and global economies in the coming months.

“We’re still bullish about Taiwan’s exports, and there is no reason to be bearish about Taiwan’s economy,” said Ho Show-chung, chairman of Sinopac Financial Holdings.

But he cautioned about uncertainties, such as in the global economy and recent volatility in the Chinese yuan.

A number of tech firms have reported second-quarter profit above expectations, including the world’s third-largest contract chip manufacturer United Microelectronics Corp and the world’s third- and fourth-largest flat-panel makers Innolux Corp and AU Optronics Corp.

Taiwan’s economy grew faster than expected in the second quarter, expanding 3.84 percent year-on-year, which dovetails with stronger momentum its two largest markets, the United States and China.

The mainland posted better-than-expected growth in the second quarter, though an unstable property market may offset the effects of further government stimulus going forward. (Reuters)