Taiwan Export Orders Point to Stronger Global Demand

By Fanny Liu 

TAIPEI--Taiwan's export orders grew at their fastest pace in 17 months in June, a further sign that a recovering global economy is boosting demand for Asia's electronics and other manufactured goods.

Orders rose 10.6% in June from a year earlier to $38.82 billion, above a 6.9% rise forecast by economists, and up 2.1% on May. The solid performance was driven by electronics exports, which grew 17% year-over-year.

Taiwan's export orders are important as they give an early indication of actual exports for an economy that is a bellwether for the global technology cycle.

June's numbers got a boost because of strong demand in the U.S. and Europe for mobile devices, including Apple Inc.'s next-generation iPhones.

Foxconn Technology Group, the largest assembler of iPhones, is based in Taiwan. Foxconn manufactures in China, but sales of those products are captured under Taiwan's export-order data.

"Orders from the U.S. have been growing sequentially over the past few months," said Lucas Lee, an economist at Mega Securities in Taipei.

Export orders related to personal computers also did well. Companies have begun upgrading hardware in response to Microsoft Corp.'s phaseout in April of technical support for its aging Windows XP operating system, creating fresh demand for PCs. Information and communications technology, which includes PCs, rose 8.8% from a year earlier.

Orders from the U.S. grew 6.7% from a year earlier, following a 3.3% rise in May, while those from Europe rose 15.2% last month, compared with a 4.3% growth in the previous month. Orders from China and Hong Kong, some of which are re-exports to developed economies, rose 14.5% last month, after growing 4.2% in May.

Still, Taiwan's exports have yet to regain the kind of monthly double-digit growth that propelled the island's economy in recent decades. One source of weakness in June was orders of flat-paneled televisions and related products, which fell 5.8% in June from a year earlier--the 14th consecutive decline.

Analysts say Taiwan's own brands have lost competitiveness. Although manufacturers such as Hon Hai Precision Industry Co. and Taiwan Semiconductor Manufacturing Co. remain central to the global supply chain, Taiwan has in recent years lost some market share to China and South Korea, which have pumped billions of dollars into product research and marketing. China has also increasingly relied on locally produced components, placing fewer orders on Taiwanese manufacturers.

But export orders could rise further as the global recovery deepens, some analysts say. The rollout of high-speed fourth-generation mobile networks across the world, the rise of wearable devices and consumers' demand for stronger computing power will continue drive sales of smartphones and tablets, economists say.