Taiwan Exports Surge to Record as Tech Demand Spurs Recovery

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Taiwan exports grew at the fastest pace since February, defying concerns U.S. sanctions on Huawei Technologies Co. would hurt trade.

• Overseas shipments grew 11.2% from a year earlier to a record monthly high of $32.2 billion, according to a statement from Taiwan’s Ministry of Finance Monday. That was faster than the most bullish forecast in a Bloomberg survey of 14 economists. The median forecast was for a 5.4% gain
• Imports fell 1%, with the trade surplus widening to $7.5 billion, also a new high

Key Insights

• Exports to China and Hong Kong rose 16.9% while shipments to the U.S. increased 21.4%
• Excluding February’s data, October’s exports rose by the fastest pace since May 2018. Economic data in January and February is often distorted due to the Lunar New Year holiday
• The delayed launch of Apple Inc.’s iPhone 12 helped boost October exports, according to the ministry’s chief statistician Beatrice Tsai, who forecast November exports will gain between 5% and 8% on year. Full-year exports are likely to grow compared to 2019, she said.
• As well as continued strong demand for electronics, one of the main reasons October’s exports were so strong was a faster-than-predicted rebound in traditional industries, said Winston Chiao, an economist at Taishin Securities Investment Advisory Co. “This momentum could well continue for the final two months of the year, boosting Taiwan’s full-year GDP to above 2%”
• Taiwan’s exports surged in August and September, fueled in large part by Huawei’s scramble to acquire as many components as possible before a U.S. ban on sales to the Chinese company came into effect in mid-September
• Even with the Huawei sanctions now in force, Taiwan Semiconductor Manufacturing Co., the world’s largest contract chip manufacturer, is struggling to keep up with demand from clients. The company said last month that 5G smartphones require 30% to 40% more chip content compared to 4G
• The continued strength of the Taiwan dollar appears to have done little to temper overseas demand for Taiwanese products. The currency has gained more than 5% against the U.S. dollar this year, among the best performers in Asia

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• Taiwan’s economy has emerged from the Covid-19 pandemic relatively unscathed, with gross domestic product climbing 3.3% in the third quarter from a year ago, the fastest pace in more than two years
• South Korea, Taiwan’s main economic rival, also saw signs of an export recovery in October. Average daily shipments rose 5.6% from a year earlier, driven by semiconductors and car sales

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