Manufacturing output down for 2nd consecutive quarter in Q1

Taipei, June 3 (CNA) The production value of Taiwan's export-oriented manufacturing sector fell for a second consecutive quarter in the first quarter of 2023, hurt again by weakening global demand, according to the Ministry of Economic Affairs (MOEA).

The sector's first-quarter output value tumbled 13.59 percent from a year earlier to NT$4.22 trillion (US$138 billion) after a 5.73 percent year-over-year drop in the fourth quarter of 2022, data from the MOEA's Department of Statistics showed.

The decline was in line with the MOEA's manufacturing index, which was down 17.68 percent from a year earlier to 82.04 in the quarter.

Electronic components, which account for almost 30 percent of the value of manufacturing production, led the decline. The value of their output plunged 16.85 percent from a year earlier due to inventory adjustments to NT$1.25 trillion in the quarter, MOEA data showed.

Semiconductor production value in Taiwan fell 11.22 percent from a year earlier to NT$778.6 billion, while flat panel makers reported a 46.52 percent decline in their output value to NT$108.8 billion due to falling product prices, the MOEA said.

Bucking the downturn, the computer and optoelectronics sector saw its production value increase for an 18th consecutive quarter in the first quarter, rising 5.15 percent from a year earlier to NT$265.5 billion.

Cloud-based technology applications have sparked demand in the sector, and an easing of raw material shortages have given the sector a boost from the supply side, the MOEA said.

Among old-economy industries, the production value generated by the chemical materials and fertilizer sectors fell 28.10 percent year-over-year to NT$392.6 billion, with many producers cutting production and doing annual maintenance to counter weak demand, MOEA data showed.

The base metals sector saw its output value tumble 20.01 percent to NT$381.2 billion because of stagnant demand for steel products, the MOEA said, and the value of machinery production slid 18.60 percent from a year earlier to US$205.5 billion.

Only the auto and auto parts industry showed a gain in output value, which rose 3.39 percent from a year earlier to NT$120.1 billion in the first quarter.

The higher output was driven by improved demand as new models were unveiled and the greater availability of automotive chips, the MOEA said.

In the coming months, the MOEA said, the global economy will likely remain hurt by high inflation and interest rate hikes, pushing down demand from end-users.

Russia's war in Ukraine and escalating trade tensions between the United States and China could also adversely affect Taiwanese manufacturers, the MOEA said.

If there is a silver lining, it is that emerging applications in high performance computing (HPC), automotive electronics, and artificial intelligence could help Taiwanese manufacturers overcome some of the headwinds caused by stagnant global demand, the MOEA said.