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Taiwan’s exports rise for first time in 13 months amid huge AI chip demand, mainland China trade uptick

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Taiwan’s exports, a bellwether for the world economy and tech industry, posted their first gain in 13 months in September amid growing appetite for semiconductor chips linked to artificial intelligence (AI).

Overall exports rose by 3.4 per cent last month, year on year, to US$38.81 billion, the Ministry of Finance announced on Wednesday.

Semiconductor sales continued to grow globally in September as developers of consumer electronics bought chips made for generative AI applications, analysts said.

The global artificial intelligence chip market was valued at US$14.9 billion last year, and is set to rise to US$383.7 billion by 2032, Allied Market Research said last week.

And Taiwan’s signature semiconductor design houses and the world’s biggest contract chip maker, Taiwan Semiconductor Manufacturing Company, are benefiting, analysts said.

“We have seen the tech downcycle hit rock bottom and it is slowly but certainly on its way upwards,” said Heron Lim, an economist with Moody’s Analytics in Singapore.

Technology makes up about one-third of the Taiwan economy, which supplies some 60 per cent of the world’s chips.

Exports of electronic components, though, fell by 4.3 per cent last month, to US$16.26 billion, compared to a year earlier.

There’s huge demand for AI chips, and there’s a little bit of improvement in China’s imports in August, so that’s helping Taiwan

Alicia Garcia-Herrero

But shipments of information, communications and audiovisual products jumped by 59.8 per cent, year on year, in September to a monthly high of US$8.26 billion.

An uptick in demand from mainland China also added support to September’s rally, said Alicia Garcia-Herrero, chief economist for Asia-Pacific at French investment bank Natixis.

Many Taiwanese exporters ship electronics parts to mainland China for final assembly to sell worldwide, and its key manufacturing, consumption, investment and trade indicators showed stronger growth in August compared to July.

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Taiwan counted mainland China and Hong Kong combined as its largest export market last month at US$13.83 billion, the ministry said, as an 8.8 per cent fall last month compared to a year earlier was milder than a 21.9 per cent year-on-year slump over the first three quarters.

Overall manufacturing activity fell for a seventh consecutive month in September, but a purchasing managers’ index compiled by the Taipei-based Chung-Hua Institution for Economic Research rose by 2.7 points last month from August.

Taiwan’s exports to the United States, meanwhile, accelerated by 17.7 per cent last month to US$6.90 billion, while Europe took 21.3 per cent more shipments in September compared to the same month last year.

But shipments from Taiwan will take time to return to the level of the early coronavirus years, when consumers were buying PCs and phones to work and study at home, analysts warned.

Export growth could return sometime in the fourth quarter, but it would be a partial recovery

Heron Lim

Global interest rates may also dent any recovery efforts, Lim added.

“Export growth could return sometime in the fourth quarter, but it would be a partial recovery and will put exports nowhere near the heights reached in 2021,” he said.

Darson Chiu, a research ­fellow with the Taiwan Institute of Economic Research in Taipei, pointed to a soft figure in September last year as a key source of a statistical gain last month.

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