Taiwan’s exports fall significantly in 2023
Taiwan’s exports totalled USD 32.3 billion in June 2023, down 23.4% from 2022. Bloomberg analysts say this is the lowest level in 14 years.
Experts blame the decline in shipments on a drop in global demand for electronics. Inflation, rising interest rates and a slowing global economy have also had a negative impact. The decline in exports is a serious problem for Taiwan. 30% of the country’s budget comes from the sale of electronics and semiconductor products. As a result, the local economy is highly sensitive to fluctuations in global demand. In the first quarter of 2023, GDP contracted by more than 3%, the most significant decline since 2009. Bloomberg analysts had previously forecast a 1.25% contraction.
Demand for semiconductors surged in 2020-2021, leading to a shortage of chips. At the time, manufacturers ramped up production significantly to meet buyers’ needs. However, the balance between supply and demand in the global market has gradually been rebalancing, partly due to a decline in electronics sales.
Semiconductor sector overview
In 2022, Taiwan’s chip exports grew by 18.4% compared to 2021. This is the seventh consecutive year of revenue growth in the sector. According to Bloomberg, the past period has been challenging for the semiconductor market. In addition to lower demand, China’s tough measures to combat COVID-19 also exerted pressure. It is important to note that China is one of the largest importers of chips from Taiwan.
However, the local TSMC Corporation is showing good sales performance despite the difficulties. The company is the world’s largest contract chip manufacturer, with more than 50% of the global chip market. In 2022, the company had revenues of USD 74 billion, an increase of 42.6% from the previous period.
Barclays analysts believe that the current year may not be so good for TSMC and the Taiwanese economy as a whole. The trend towards geographical diversification of production capacity could adversely affect the situation. However, the company is planning several measures that will allow it to remain the market leader:
– construction of new facilities in Japan and the United States in addition to TSMC’s existing facilities in these countries;
– considering the structure of manufacturing facilities in Europe.
It is necessary to note that other global semiconductor manufacturers want to expand their presence in other states. These include Foxconn, Intel and Vedanta. These companies are considering setting up their own factories in India and Vietnam.
