Taiwan October exports edge down but chip demand holds up

TAIPEI : Taiwan's exports fell in October for the second straight month though less rapidly than forecast due to continued strong demand for chips for high performance computing and autos, but with the outlook again clouded by global inflation and the war in Ukraine.

Exports edged down 0.5 per cent in October from a year earlier to $39.93 billion, the Ministry of Finance said on Tuesday.

That was better than a forecast for a 6 per cent contraction in a Reuters poll, and followed a 5.3 per cent drop in September - the first contraction in more than two years.

The ministry said while global demand overall was slowing, tech exports were holding up well, helped by demand for high-performance computing, autos and data centres.

Taiwan's total exports of electronics components in October rose 15.9 per cent to $16.9 billion, with semiconductor exports up 19.4 per cent from a year earlier.

Many companies expect global chip shortages to last at least for the rest of the year, which will continue to bolster Taiwanese semiconductor firms' order books even as demand for some consumer electronics weakens.

Firms such as TSMC, the world's largest contract chipmaker, are major suppliers to Apple Inc and other global tech giants, as well as providers of chips for auto companies and lower-end consumer goods.

United Microelectronics Corp, a smaller competitor of TSMC, this week reported October sales jumped 27.1 per cent year-on-year.

Still, Taiwan's exports to China, the island's largest trading partner, fell an annual 9.2 per cent to $14.72 billion in October, after a 13.3 per cent drop in September.

China's exports and imports unexpectedly contracted in October, the first simultaneous slump since May 2020, as surging inflation and rising interest rates hammered global demand while new COVID-19 curbs at home disrupted output and consumption.

While Taiwan's finance ministry expected demand for chips in tech products ahead of the end-of-year shopping season to help maintain the export momentum, it said global inflation, monetary tightening, China-U.S. tensions and the Russia-Ukraine war would "continue to deepen doubts about the international economic outlook".

"This may constrain our country's export performance in the fourth quarter," it added.

The fourth quarter is traditionally the hot season for Taiwan's tech companies as they race to supply cellphones, tablets and other electronics for the year-end holiday period in Western markets.

October exports to the United States were up 3.1 per cent, compared with the 2.1 per cent contraction recorded the previous month.

Taiwan's October imports rose 8.2 per cent to $36.95 billion, driven by energy and semiconductor equipment, compared with economists' expectations of a 3.5 per cent drop and after a fall of 2.4 per cent in September.

Taiwan could see November exports contract in a range of 5 per cent to 8 per cent from a year earlier, the finance ministry said.