Taiwan: machinery output -2% in 2016

201511140008t0001Taiwan’s machinery production value for 2016 is expected to fall 2% in the wake of weakening global demand due to a slowing economy in the world, according to the Market Intelligence Center (MIC) under the government-sponsored Institute for Information Industry.

The MIC said that output of the local machinery sector is expected to total NT$948.7 billion (US$28.84 billion) in 2016, down 2 percent from the NT$968.1 billion forecast for 2015, when the sector is expected to suffer a 0.48 percent year-on-year fall. The research group said that global demand for machine tools and production equipment for high-tech devices is expected to remain slow next year, which could hurt Taiwan’s machinery industry.

Such an unfavorable circumstance for Taiwan’s machine tool maker is expected to continue to the second quarter of next year and even into the third quarter, according to the MIC. In 2015, it said, the production value of Taiwan’s machine tool segment is expected to fall 10.4 percent from a year earlier to NT$135.2 billion, while output of Taiwan-made production equipment for high-tech gadgets is expected to rise slightly by 1.1 percent from a year earlier to NT$124.9 billion.

Affected by the weakness of the global market, Taiwan’s machine tool exports for the first nine months of this year fell 13.4 percent from a year earlier, according to the MIC. During the nine-month period, China and the United States were the top two buyers of Taiwan’s machine tools, accounting for 30.2 percent and 11.9 percent of Taiwan’s total exports, the MIC said.

The MIC said that the global semiconductor industry is faced with a slowdown and sales in the integrated circuit market is expected to fall 0.8 percent year-on-year in 2015 to US$337.8 billion, prompting several IC giants, such as Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC) to cut their capital expenditure, which has hurt Taiwan’s machinery suppliers.

In mid-October, TSMC, the world’s largest contract chip maker, announced it will slash its capex to US$8 billion from the previously planned US$10.5 billion to US$11 billion for 2015.

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