Taiwan’s Export Order Slowdown May Be Sign of Easing Tech Demand

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Demand for Taiwan’s semiconductors and other electronic components showed signs of abating in May as growth in overseas orders for technology products slowed.

Export orders grew 34.5% from a year earlier to $52.3 billion in May, Taiwan’s Ministry of Economic Affairs said Monday. That was lower than the 42.1% increase economists had forecast in a Bloomberg survey, but still a record for the month of May.

Officials see demand easing slightly, predicting orders will increase by between 28.1% and 31.7% in June. The data is a leading indicator for future demand for goods from Taiwan’s companies, and includes products produced at factories abroad.

Taiwan’s Export Order Slowdown May Be Sign of Easing Tech Demand

A similar trend was seen in South Korean early trade data for June, with the surge in exports slowing, according to official data released Monday. Korean shipments in the first 20 days of this month rose almost 30%, lower than in April and May, but still at a high level.

The Korean and Taiwanese data are closely watched as early barometers of the Asian tech cycle. Orders for electronics and communication equipment to Taiwan’s firms, the two largest categories, both slowed last month.

Taiwan’s factories have been running at -- or close to -- full capacity for much of this year, trying to meet overseas demand for semiconductors. Manufacturing production expanded in May at the fastest pace since 2011 but shortages of materials may slow growth, according to a report by IHS Markit earlier this month.

The robust health of Taiwan’s export sector comes despite multiple headwinds in May.

An outbreak of Covid-19 led to island-wide restrictions with clusters of infections among migrant workers affecting production at a number of factories in Miaoli County. The worst drought on record also left manufacturers shipping in their own water and triggered rolling blackouts.

©2021 Bloomberg L.P.

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