Unencumbered by interest rate pressures, Taiwan’s high-tech export orders resume as world prepares for AI

Taiwan, a global technology production hub, has reported monthly increases in vital export orders due to rising demand for AI-related devices, with the increase coming under sustained pressure from high interest rates. nevertheless achieved.

The Ministry of Economy announced on Tuesday that orders received last month amounted to US$48.42 billion, an increase of 1.9% from the same month last year.

The island’s economy relies on the production of high-tech hardware and is considered a bellwether of global health for consumer electronics, but export orders reported a year-on-year decline for the 14th consecutive month. However, since then, export orders have increased slightly by 1%. in November. Orders then declined again in December.

Further evidence of growing global demand for components that speed up artificial intelligence calculations likely helped Taiwan’s cause in January, analysts said.

AI is the next big factor in Taiwan’s export and industrial development

Hu Jinli

“Orders for AI products continue to increase,” said Hu Jinli, a professor at the Institute of Business Administration at National Yangming Jiaotong University in Taipei.

“AI is the next big factor in Taiwan’s export and industrial development,” he added.

Global Market Estimates announced in November that the global AI-optimized hardware market could grow at a compound annual growth rate of 25.9% from 2023 to 2028.

Taiwan, which ranks first in export orders, has committed overseas purchases of household appliances of US$17.45 billion, an increase of 16.1% from a year ago last month.

Meanwhile, orders for information and communication products decreased by 19.3% year-on-year, ending last month at USD 13.91 billion.

U.S. orders to Taiwan also rose slightly by 2.7% last month, with U.S. orders in January leading other global markets at $15.39 billion, according to the ministry’s data.

Last month, total orders from mainland China and Hong Kong reached US$10.64 billion, an increase of 28% year-on-year. Commitments from the 10-nation Association of Southeast Asian Nations soared 117.9% to US$9.08 billion, while orders from Europe to Taiwan fell by 50%.

Consumer electronics and their components drive Taiwan’s technology sector, which accounts for about 30% of the economy. The island supplies an estimated 60% of the world’s semiconductor chips, including the most advanced ones.

Hu said semiconductors, automotive electronics and electric vehicle parts were likely the drivers of orders for AI-related equipment last month.

Taiwan expects USD 7.3 billion in AI investment in 2024, exports will expand again

Market research firm Canalys predicted last month that the global wearable band market will expand by 10% this year as interest in smartwatches is “expected to pick up again.”

“Taiwan’s exports have been strong in recent months, thanks to strong electronics shipments benefiting from the artificial intelligence boom,” said Heron Lim, assistant director and economist at Moody’s Analytics.

However, he said a long-term recovery in orders could “take some time” due to persistently high interest rates around the world. Financial authorities in many countries raised interest rates last year to combat inflation.

Higher interest rates make consumers less willing to take out loans for big purchases or investments, slowing down overall consumption.

“We expect central banks around the world to start easing monetary policy settings in mid-year, which will allow demand to find a better footing,” Lim said.

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