TAIPEI: Global trade data in the Covid-19 era has been generally abysmal, but look a little closer and the electronics sector that fires Asia’s trade engines could be headed for a pretty good year.
In South Korea, semiconductor exports rose in May and imports of equipment used in producing semiconductors surged 168%, trade ministry data show.
Taiwan’s electronic-component exports, which include chips, grew 13.2% in May to US$10.2bil, even as total exports fell 2% from a year earlier.
The electronics industry is holding up relatively well amid the pandemic as companies adopt new technologies – including 5G equipment and automation tools – that make it easier for employees to work remotely.
A sustainable boost will depend on whether consumers return with similar vigor, and whether other factors such as US-China tensions don’t interfere with digital demand and supply.
“The tech industry seems to have decoupled from the overall economy somewhat, as the tech industry is still growing well” and has been “relatively immune to Covid-19, ” Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co, said at a shareholder meeting June 9.
TSMC, the main chipmaker for Apple Inc and Huawei Technologies Co, still planned to spend as much as US$16bil on capacity upgrades and technology this year, and expected revenue gains in the mid- to high-teens, Liu said.
Covid-19 has helped drive some budding technologies related to remote work and education and social distancing, he added.
TSMC shares have risen 25% since their lowest close for the year on March 19, less than the 30% gain in Taiwan’s benchmark Taiex stock index in that time. TSMC shares were down 2.2% as of 1:32pm yesterday, compared to a 0.98% drop in the Taiex.
Amid generally awful export figures from the region, “the one bright spot is semiconductors, ” said Trinh Nguyen, a senior economist at Natixis SA in Hong Kong.
“A lot of this reflects the product cycle and also the global lockdown and suppression that favor the ‘digitalisation’ of economic activities, driving demand for electronic goods like chips.”
For economies like South Korea and Taiwan that rely on tech exports, “the upturn in demand for electronics has been a pillar of support amid the coronavirus pandemic, ” said Lloyd Chan, an economist at Oxford Economics Ltd.
“However, the improvement in the tech sector won’t be able to offset significant demand weakness in non-electronic exports, ” he said, adding that even the surge in PC demand “could be a one-off, ” attributable to the sudden shift to telecommuting during the pandemic.
Still, it helps that some of Asia’s most tech-focused economies have had relative success in containing the virus: Taiwan has reported just seven virus deaths, South Korea flattened its curve fairly early and Singapore’s fatality rate is among the world’s lowest. — Bloomberg
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