A view of Dadaocheng Wharf, Tapei, Taiwan at night. Picture: 123RF/JY23
A view of Dadaocheng Wharf, Tapei, Taiwan at night. Picture: 123RF/JY23

Taipei — Taiwan’s export orders fell at a slower pace than expected in April, but the government says May will bring a seventh straight month of contraction as slowing global tech demand continued to hurt the island’s trade-reliant economy.

Orders in April dropped 3.7% from a year earlier to $37.66bn, ministry of economic affairs data showed on Monday. A Reuters poll had forecast a 5.9% fall. In March, orders dropped 9% from a year earlier.

Taiwan’s high-tech factories are major suppliers for global tech heavyweights such as Apple and Qualcomm, and the continued weakness in orders suggests global electronic demand will remain soft for some time.

Carl Liu, an analyst at KGI Securities, noted that April orders did not include the latest escalation of the US-China trade war, “which has added risk to future export orders and will decrease and delay any recovery to export orders in the second half of the year”. The new tariffs “will mean very limited growth momentum”, he said.

The ministry attributed the April shrinkage to slowing global growth and demand for end-products as the US-China trade dispute continues. It said that should the US impose 25% tariffs on an additional $325bn of Chinese goods, the impact on Taiwan would be “significant”, especially on smartphones and computers.

“Global trade tensions are intensifying, and it is likely to affect the growth momentum of orders,” the ministry said in a statement.

Optical equipment, in particular, decreased by 8.9%, due to weak demand for panels and new capacity in mainland China.

The ministry expects May export orders to decline 7.6%-10%. But it said 2019’s second half — which will include launches of smartphone models and rising demand for new technologies including 5G, cloud computing and artificial intelligence — could support a rebound of electronics orders. “The continued expansion of emerging applications will help bring new business opportunities,” the statement added.

The prolonged downturn in global tech demand has hit profits for Taiwan’s many technology manufacturers this year. TSMC, the world’s biggest contract chipmaker, posted a 32% drop in March quarter net profit from a year earlier, citing slowing mobile sales.

Foxconn, the world’s largest contract manufacturer, reported a bigger fall in quarterly profit than analysts had expected, amid waning demand for electronics from its key customers.

In April, weak export demand was seen from Taiwan’s major markets. Orders from the US fell 6% year on year, on top of March’s 9.7% decline. Those from China dropped 9.9% from a year earlier. But those to Japan and Europe increased from a year earlier.
Reuters