Taiwan export orders fall for 9th month but Christmas bounce kicking in
* July orders -3% y/y vs -5.9% in Reuters poll
* Orders from China drop 6.3% y/y; U.S. down 1.6%
* Ministry sees Aug orders falling, but eyes stabilisation
Recovery might not come till Q1 2020 - analyst
TAIPEI, Aug 20 (Reuters) - Taiwan's export orders contracted
for a ninth straight month in July though at a slower pace than
expected, which might signal demand for new electronic products
as the peak year-end season for gadgets approaches.
Tuesday's data showed a milder contraction in orders from
China and Europe compared with June. But amid escalation in the
U.S. trade war with China, demand for Taiwan products from the
U.S. contracted, after increasing the previous month.
Total orders in July dropped 3.0% from a year earlier to
$40.53 billion, data from Taiwan's Ministry of Economic Affairs
showed. That was better than a forecast of a 5.9% decline in a
Reuters poll and June's 4.5% drop.
The ministry expects August export orders to decline
2.7-5.0% on-year, but held out hope for gains afterwards.
The ministry said orders for electronics including laptops
and servers remained weak amid the trade war, but Taiwan has
seen a milder contraction thanks to demand for new electronic
products ahead of the year-end, when smartphone vendors are set
to launch products.
"With the approach of the peak season for electronics ...
export orders could gradually stabilise in the second half," the
ministry said, citing rising demand for fifth-generation
telecommunications (5G) technology.
Others were not so sanguine and said the trade war continues
to create uncertainty about Taiwan's growth.
"We expect continuous contraction for export orders until
the end of the year, but fortunately the decline won't
deteriorate," said Johnny Ching, economist at Masterlink
Securities Investment Advisory.
In Ching's view, orders could return growth again in the
first quarter at the earliest.
Taiwan's hi-tech factories are major suppliers for global
tech heavyweights such as Apple Inc and Qualcomm
, and the continued drop in orders suggests global
electronics could remain soft for some time.
Despite weak exports, Taiwan's government last week raised
its 2019 economic growth forecast as more factories move
production back to the island from China as the Sino-U.S. trade
The relocation trend could cushion the direct impact of the
trade dispute and further improve exports in the second half.
Shipments in coming months could also benefit from U.S.
President Donald Trump's decision last week to delay new duties
on some Chinese imports including cellphones, laptops and other
consumer goods from Sept. 1 to Dec. 15, in the hopes of blunting
their impact on U.S. holiday sales.
July orders from the United States dropped 1.6% on-year,
compared to June's 6.8% growth.
Orders from China dropped 6.3%, compared with a fall of
14.6% the previous month, while orders from European buyers
slipped 1.8%. Japan orders grew 0.7%.
Taiwan's manufacturers have suffered from trade war
disruptions and sluggish global demand for gadgets.
Foxconn, which makes smartphones for Apple and
other brands, last week reported a 2.5% fall in second-quarter
profit and faces more challenging quarters ahead as Washington
plans to impose additional tariffs.
Applied Materials Inc, which supplies equipment for
micro-chip makers, beat Wall Street estimates for quarterly
revenue last week but cautioned that a recovery in the memory
chip market is unlikely before 2020.
(Reporting by Yimou Lee, Emily Chan and Jeanny Kao; Editing by
First Published: 2019-08-20 10:04:24
Updated 2019-08-20 11:32:29
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