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Leading Machine Tool Makers in Taiwan See Market Momentum Building in H1, 2016 but Faster Growth in H2

Jan 05, 2016 | By Ken Liu

Taiwan's leading machine-tool makers projected to grow into 2016 regardless of hazy market outlook in first half. Taiwan's leading machine-tool makers projected to grow into 2016 regardless of hazy market outlook in first half.
The recognized leading makers of machine tools and components in Taiwan, including Hiwin Technologies Corp., Tongtai Machine & Tool Co., Ltd., Kao Fong Machinery Co., Ltd., Shih Yih Machinery Co., Ltd., and Taiwan Takisawa Technology Co., Ltd., are projected to grow at annual rate ranging from two percent to over 10 percent in 2016 regardless of uncertain market outlook in the first half.

The said manufacturers reportedly agree on the market outlook in 2016, and say that the 2016 market will likely “squat” in the first half and “leap” in the second half, meaning the market will build momentum in the first half to bound towards faster growth in the second half. 

In the first half the market, they say, will be mostly hamstrung by the deceleration of mainland China's economic growth, the lingering stalemate over talks on tariff reduction related to trades of commodities including Taiwan-built computer numerical control (CNC) lathes between Taiwan and the mainland, and fewer workdays in the Chinese New Year break that starts on February 8 and lasts generally for a week or longer depending on employer and governmental policy. They point out that the mainland authorities intend to resume the 9.7 percent tariff on Taiwan-made CNC lathes on the first day of 2016 if the Taiwan-made machines destined for the mainland are not equipped with controllers made either on the mainland or Taiwan.

They believe the market will likely rebound as early as in the second half although the signs of recovery will not be visible in the first half.

In an effort to make up for lost orders in the weak general-purpose machine-tool market, Hiwin in January will license its technology for making several dedicated machines to three mainland Chinese makers, which will integrate Hiwin-made feeding/retrieving robotic arm and key components into such machines. The company expects the strategy to strengthen sales in the first quarter.

Industry executives estimate the company's revenue for 2016 to rise to NT$16 billion (US$484.84 million) from NT$15 billion (US$454.54 million) they had projected for 2015 based on the NT$13.92 billion (US$421.96 million) the company had generated in the first 11 months.

Industry executives project Kao Fong to see consolidated revenue for 2016 increase around 10 percent from 2015, to over NT$2.2 billion (US$66.66 million), in spite of the company's comment that booked orders will only keep production lines busy throughout February, after which order visibility remains uncertain.

Kao Fong is estimated to have generated consolidated revenue of NT$2.03 billion (US$61.51 million) in 2015 based on that its revenue for the Jan.-Nov. period had lost 0.48 percent year on year to NT$1.89 billion (US$57.27 million) and revenue for the final month was roughly NT$140 million (US$4.24 million).

Tongtai estimates its consolidated revenue for 2015 at around NT$9 billion (US$272.72 million), slipping from NT$9.1 billion (US$275.75 million) it had generated in 2014. The company says it still has NT$1.9 billion (US$57.57 million) of booked orders to keep production lines humming throughout March.

Industry executives estimate the NT$600 million (US$18.18 million) of orders the company has won to supply 16 machines to the Aerospace Industrial Development Corp. (AIDC), reportedly Taiwan's biggest aircraft builder, will help to build its revenue in the first quarter of 2016.

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