Manufacturing sector's Q2 fixed asset investments up on IC expansion

Taipei, Sept. 13 (CNA) Investments in fixed assets in Taiwan's manufacturing sector rose about 28 percent in the second quarter as semiconductor suppliers moved to expand production, according to the Ministry of Economic Affairs (MOEA).

Manufacturers' fixed asset investments, which refer to funds put into factories, machinery, equipment and other durable capital goods but excluding the purchase of land, totaled NT$620.5 billion (US$20.53 billion) in the second quarter, up 28.1 percent from a year earlier and also up 1.5 percent from a quarter earlier.

In a statement released last week, the MOEA said the electronics component industry saw fixed asset investments in the April-June period rise 37.3 percent from a year earlier to NT$451.8 billion, accounting for 72.8 percent of the total.

The growth reflected a growing appetite among semiconductor firms, such as pure play wafer foundry operators, IC packaging and testing service providers and memory chip suppliers, to expand production and upgrade technologies to meet global demand for emerging applications, such as in the field of artificial intelligence, the MOEA said.

Fixed asset investments in the computer and optoelectronics industry in the second quarter surged 64.1 percent from a year earlier to NT$19.9 billion due to anticipated rising demand in the AI era, the MOEA said.

In the old economy sector, the oil and coal industry added NT$16.8 billion in fixed asset purchases in the second quarter, up 1.3 percent from the same period a year earlier, backed by an increase in investment by state-own companies.

The base metal sector made NT$15.5 billion in fixed investments during the quarter, up 25.7 percent from a year earlier as steel producers spent more on low carbon and smart production and on annual maintenance.

Also among old economy industries, the chemical materials and fertilizer industry totaled NT$22.7 billion in fixed asset investments in the second quarter, up 9.8 percent from a year earlier as some petrochemical firms sought to upgrade equipment or boost capacity.

Bucking the uptrend, the MOEA said, the machinery sector saw a 1.5 percent year-on-year decline in fixed asset investment in the second quarter at NT$10 billion on expected lower demand as some clients had just completed the construction of new facilities, the MOEA said.

That weakness was somewhat offset by demand for machinery from semiconductor producers eager to expand capacity.

Sales posted by Taiwan's manufacturing sector in the second quarter hit NT$8.88 trillion, up 10.5 percent from a year earlier and up 8.9 percent from a quarter earlier, the MOEA said.

The increase was largely due to strong global demand for AI, high performance computing (HPC) devices and cloud services, while the non-tech economy saw clients' buying interest affected by uncertainties in international trade.