Industrial production fell in November for the third month in a row

Taipei, Dec 24 (CNA) Amid fast-rising global inflation and weakening global consumer demand, Taiwan’s industrial production fell nearly 5 percent year on year in November, marking the third straight month of a year-year decline, according to the data Ministry of Economy (MOEA).

Data compiled by the Ministry of Commerce showed that Taiwan’s November industrial production index fell 4.93 percent from a year earlier to 130.3.

The latest decline widened from a 4.27 percent drop in October, with the manufacturing sub-index, which accounts for more than 90 percent of the county’s total industrial output, falling 5.26 percent from a year earlier to 132.80 after a Decrease of 3.40 percent fell a month earlier.

Huang Wei-chieh (黃偉傑), deputy director of the statistics department of the economy ministry, said high inflation has triggered an aggressive rate-hiking cycle by the world’s major central banks, discouraging end-user spending and increasing inventories in the global supply chain November further back.

The November number also resulted from a relatively high comparison base in the same period last year, Huang said.

However, compared with a steep 23.4 percent drop in the country’s export orders in November, Huang said the manufacturing weakness is moderate, as about 45 percent of output in the local manufacturing sector came from domestic demand.

Despite the downturn, electronic component production rose 1.02 percent year-on-year in November, driven by solid demand for new technologies such as 5G applications and high-performance computing equipment, which further boosted the Pure Play’s 12-inch wafer production Foundry segment, the Commerce Department said.

However, demand for consumer electronic devices remained weak and inventory adjustments for flat panel displays and memory chips remained high, offsetting growth across the electronic components industry, the Commerce Ministry added.

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The computing and optoelectronics industry saw output rise 4.80 percent year-on-year in November as demand for cloud data services and equipment used in data centers increased and supply of raw materials increased, fueling the production of servers, wireless communication devices, notebook Computers and related computer items according to the MOEA.

Huang said flagging global demand continues to hurt old-economy industries, causing many manufacturers to scale back production in November, with most reporting double-digit production declines.

In the month, output of chemical raw materials, base metals and machinery industries fell 25.87 percent, 21.86 percent and 13.68 percent year-on-year, according to the economy ministry.

The auto/auto parts industry, however, outperformed other old economy industries in November, up 6.03 percent year-on-year, reflecting strong buying ahead of the upcoming Lunar New Year holiday, which will fall in late January 2023, though massively Promotional campaigns by car brands also boosted purchases for the month.

In the first 11 months of this year, Taiwan’s industrial production rose 1.8 percent year-on-year, with the manufacturing sub-index rising 1.87 percent year-on-year, the economy ministry said.

From the start of the fourth quarter, Huang said only semiconductors, computer/optoelectronics and auto/auto parts served as anchors to stabilize Taiwan’s industrial output.

Huang said the computer/optoelectronics industry has benefited from a spike in orders from the United States as Washington slashed its orders to China over cybersecurity concerns, adding that servers from US markets have also been growing. The local computer/optoelectronics industry was also lifted by a relatively low basis of comparison over the same period last year, Huang added.

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Regarding the semiconductor industry, Huang said that demand for chips made with high-end processes was offset by weaker demand for mature processes due to inventory adjustments, and forecast that this will continue into the first half of next year could last.

Looking ahead, Huang said the manufacturing sub-index is expected to range between 130.08 and 134.08, falling 7 percent to 9.7 percent from a year earlier.

In the fourth quarter, the sub-index is expected to fall 5.5-6.4 percent year-on-year, while the full-year 2022 sub-index is expected to rise 0.8-1.1 percent year-on-year, Huang said.