cens logo

Taiwan's Machinery Industry Hindered by Supply Chain and Pandemic Issues

Sep 09, 2021 | By CENS



The machinery industry in Taiwan has been experiencing a five-month consecutive growth in the double-digits as of Taiwan Association of Machinery Industry's (TAMI) statistics released in June, rounding up the export value at USD$13.167 billion, a 27.5% annual growth. Figures indicate that the growth would continue despite the local COVID-19 outbreak in Taiwan.

As of writing, Taiwan is still amid the worst locally transmitted outbreak since the COVID-19 pandemic began last year, though cases appear to have tapered off by the end of June. Companies and local governments have been moving quickly to stem transmission and flush out cases through proactive screening measures. Much of Taiwan's machinery capabilities are located in central Taiwan, specifically Taichung City, compared to the island's financial sector in the Greater Taipei area, which saw the most cases since May.

However, TAMI Chairman Larry Wei warned in late May that should the Taiwan dollar's exchange rate to US dollars exceed NTD$27.5, all the progress and profits could be wiped clean due to exchange loss. To build up resilience, many domestic machinery suppliers have opted to filter incoming orders, Wei said, pointing out that these companies would rather ensure these orders are profitable, rather than focusing on sales targets. It was another example of how the pandemic has changed not only consumer behavior, but also companies taking in orders.

In certain cases throughout Q1-Q2, Wei reported that some suppliers have already lost profits due to the exchange loss, lamenting that they did not make any gains even when delivering the orders.

Machinery manufacturers are also feeling the squeeze from rising prices, ranging from essential raw materials such as steel and copper to cardboard used to deliver the products, which reportedly rose at least 30%. Labor shortages and rising shipping prices caused by container shortages due to longer docking time at various ports around the world were also factors as well.

Wei pointed out that many machine tool manufacturers usually see orders coming in up to Q4, therefore he expects the sector's export value and industry value to grow a yearly 30%. However, the aforementioned factors have led companies to prioritize quality orders over quantity. He implored government intervention to stem profit losses and help Taiwanese machinery suppliers pull through the recession.

Other examples of rising costs could come in the future. Export-focused manufacturers should consider the ramifications of the European Union's proposal of carbon taxes on certain industrial imports by 2023.


Tech Upgrades Crucial in Light of Climate Change

Another factor that should spur companies into embracing more technological upgrades to existing production lines is how extreme weather caused by climate change is pressuring existing infrastructure. For instance, aside from the local COVID-19 outbreak, Taiwan had been in the grips of the worst drought in the past 56 years, specifically in the central and southern parts of the island, and expanded into parts of northern Taiwan. That included Taiwan's technology hub, concentrating the world's semiconductor production. Electricity shortages had also hit the island as well, largely due to increased power consumption weeks earlier than usual ahead of the summer months due to warmer weather.

Referring to Taiwan Power Company statistics, DIGITIMES Research cited resource shortages as a prime incentive to streamline factory production efficiency. At the helm of this technology, companies could employ AI solutions to help factories save 8~17% of electricity and push down costs on water waste treatment by 5~10%.

On the other hand, streamlining factory technologies could prepare companies ahead of events, situations that require faster responses and solutions. In an article published earlier this year, McKinsey & Company highlighted how the technological advancements implemented through Industry 4.0 were put to the test amid the global supply chain disruption and COVID-19 pandemic-fueled lockdowns.

According to the article, 94% of surveyed companies said that implementing Industry 4.0 had helped them keep operations running during the pandemic, while 56% reported that the technologies had a crucial role in their crisis responses. This signaled companies with more mature implementations were able to respond accordingly.

The McKinsey article described how a consumer packaged-goods (CPG) company in Asia was able to run different scenarios by setting up a digital twin of its production chain. The company was able to prepare by planning operations, such as in light of sudden shutdowns of manufacturing locations due to lockdowns, localized outbreaks, or supply chain disruptions.
For companies that hadn't actively pursued Industry 4.0 technologies before the COVID-19 pandemic, the McKinsey article stated that the events throughout last year had prompted them to reevaluate their digital transformation progresses.

In Taiwan, Industry 4.0 has been a hot topic among industry watchers and companies, as government agencies, research institutions, and enterprises have mobilized resources to implement emerging technologies. For instance, at the end of June, Industrial Technology Research Institute (ITRI) announced the four winners for an internally-hosted R&D award, including a smart manufacturing service platform for the PCB industry, which saw at least 20 domestic companies implementing it in their operations.

The platform has four features: high-integration, boasting the world's first three-in-one platform that combines communication protocols, root cause analysis, AI defect analysis; improving employee efficiency through workforce management; smart features using AI to help workers navigate issues when they lack the necessary technical experience and ensure higher quality through accuracy rates as high as 98%.

Like with most AI solutions, streamlining the PCB industry, one of the top three industries in Taiwan to hit trillion-industry output value in 2020, would pose multiple advantages for companies to leverage, making operations more resilient and efficient.



Industry Reports

Taiwan's top machine tool expos TIMTOS and TMTS to debut together in 2022</h2>

Taiwan's top machine tool expos TIMTOS and TMTS to debut together in 2022

Sep 15, 2021

Taiwan's two largest machinery-related trade expos, TIMTOS and TMTS, will debut together in 2022 in Taipei on February 21 to 26. Taiwan External Trade Development Council (TAITRA) expects organizers and exhibitors will benefit from the combined events. Booth numbers are expected to exceed over 5,000, making it the biggest in history. Taiwan Association of Machinery Industry (TAMI) hopes that ...


Photo credit: UDN file photo

Potential lifting of expo restrictions uplifting yet worrying due to COVID: TAMI

Sep 14, 2021

With the remarks from Taiwan's executive branch suggesting loosening COVID-19 related restrictions on crowd gatherings and large-scale events, Taiwan Association of Machinery Industry Chairman Wei Tsan-wen has expressed support of the plans, emphasizing that opening up trade events will help bolster the machinery industry's recovery. According to the Economic Ministry's statistics of last yea...


Photo courtesy of Reuters.

SEA's eases strict COVID-19 lockdown as economic issues ripple through supply chain

Sep 13, 2021

Media reports say that prolonged restrictions in Southeast Asian countries have taken a toll on their economies due to the Delta variant-fueled COVID-19 outbreak. Governments have begun reopening their economies despite the surge of COVID-19 cases and lack of containment, largely blamed on the slow vaccine roll-out. The region had quickly overtaken other parts of the world to become the worst...



Industry In-Focus

Machinery and machine tool industries brace for uncertainty despite stunning gains</h2>

Machinery and machine tool industries brace for uncertainty despite stunning gains

Sep 14, 2021

Taiwan's machinery and machine tool industries reported a stunning report card despite setbacks last year while the rest of the world was in lockdown due to the COVID-19 pandemic. The global economy's reopening in the first half of 2021 was also a boon for semiconductor production equipment, machine tools, and mechanical transmission equipment demands. According to Taiwan's Economic Ministry stat...


Photo courtesy of UDN.

Construction cost index increase at all-time-high

Sep 11, 2021

Construction demand is at an all-time high, even amid rising prices and shortages of materials. The Directorate General of Budget, Accounting, and Statistics under the Executive Yuan released its latest statistics on Friday, indicating that the August Construction Cost Index (CCI) increased 13.57%. This is largely due to international scrap metal prices increasing, with steel rising around 50...


Photo courtesy of Signify

Food security and global policies fuel LED grow light demands: TrendForce

Sep 10, 2021

Food security concerns and global government policies are driving the demand for LED grow lights, specifically North America's medical and recreation-use marijuana markets, TrendForce's new 2021 Global LED Market Report-LED-grade packaging, and LED products for 2H21 has found. The increased demand has led to an explosive uptick in 2020's global grow light LED market, rounding up the industry v...



Supplier News

Career Industry supplies paper-tube, yarn-core making machines and peripheral processing equipment</h2>

Career Industry supplies paper-tube, yarn-core making machines and peripheral processing equipment

Sep 13, 2021

The Taiwan-based Career Industry Corp. is a supplier and coordinator of paper-tube making equipmentwith sales and technical services, with over 20 years of experience. Career supplies a very wide range of machinery products to meet the various requirements, including paper tube-making, paper tube winder, slitter/rewinder, and paper tube-cutting machines, as well as partiallyoriented yarn (POY)...

CAREER INDUSTRY CORP.


Chen Fwa Industrial makes variety of high-precision,  automatic drilling, tapping machineries, multi-spindle heads</h2>

Chen Fwa Industrial makes variety of high-precision, automatic drilling, tapping machineries, multi-spindle heads

Sep 13, 2021

Chen Fwa Industrial Co., Ltd., founded in 1964, has released a variety of high-precision, automatic drilling machines, tapping machines and drill bits, which are available in mainland China, Southeast Asia, North America, Latin America, East Europe and Western Asia. With ample experience and a team of skilled design engineers, the company is fully capable of introducing high-precision, special...

CHEN FWA INDUSTRIAL CO., LTD.


Chen Yeh Machinery specializes in paint and printing ink turnkey equipment</h2>

Chen Yeh Machinery specializes in paint and printing ink turnkey equipment

Sep 13, 2021

Founded in 1978, Chen Yeh Machinery Co., Ltd. has been well reputed among global buyers as a reliable Taiwanese supplier of whole-plant equipment for making paint and printing ink. The company mainly supplies coating machines; three-roller machines for production or R&D applications; single-shaft, double-shaft, and triple-shaft mixers; vertical dead mills, mixing barrels; filters, chemical equ...

CHEN YEH MACHINERY CO., LTD.



Insiders' Views

Nan Hoang Traffic Instrument Co., Ltd.</h2><p class='subtitle'>Taiwan First brakes Technology Co., Ltd. </p>

Nan Hoang Traffic Instrument Co., Ltd.

Taiwan First brakes Technology Co., Ltd.

Mar 04, 2021

Nan Hoang Traffic Instrument Co., Ltd is one of the major manufacturers of automobile friction materials in Taiwan and globally. Chairman Austin Cheng has implemented the double-arrow strategy this year - own brand of “YangPo” is adopted to focus on global channels while the “NHC brand focuses on improving market shares in global markets, such as Europe, America, Asia, Australia, and the Middle E...

NAN HOANG TRAFFIC INSTRUMENT CO., LTD.


OmniEyes CEO and Co-Founder Chun-Ting Chou. (Photo courtesy of OmniEyes)

OmniEyes' AI Technology Paves the Way for Traditional Industries' Digital Transition

Dec 15, 2020

The COVID-19 pandemic has accelerated the industries' timeline for implementing digital transformation. However, the how's and what's of applying new technologies and improving the added value to existing products and services can be daunting. Three professors from the National Taiwan University College of Electrical Engineering and Computer Science founded the startup company "OmniEyes," basi...


Caption: Pictured from front row, third right, Changhua County Government Economic Affairs Department Director Liu Yu-ping, County Magistrate Wang Huei-mei, Secretary Chen Bo-tsun pose in front of the exhibition booth. (Photo provided by CHCIA)

Changhua County Government Shores up Biz-Matching to Global Buyers

Nov 18, 2019

■Yang Feng-Chun In a bid to assist manufacturers in Changhua County to expand their market reach overseas against severe competition in the globalized market, Changhua County Government has been an active player in pushing for a makeover and innovation of its local small and medium-sized enterprises. This is done in hopes of establishing stronger connection with international markets. An ex...



Exhibition Highlights

International Fastener Show China 2021 is always going up </h2>

International Fastener Show China 2021 is always going up

Jul 16, 2021

With an exhibition area of 42,000 square meters, there were breakthroughs of the scale and level for International Fastener Show China 2020. IFS China gathered 725 renowned enterprises and set up 1936 booths, attracting 36,080 visitors including 4212 overseas visitors from 53 countries and regions in 2020. For last edition, IFS China 2020 boasted an active participation of overseas equipment ...


One month-long COMPUTEXVirtual kicks off this week with keynote speeches</h2>

One month-long COMPUTEXVirtual kicks off this week with keynote speeches

Jun 01, 2021

The 2021 Taipei International Computer Show (COMPUTEX TAIPEI 2021) kicked off its #COMPUTEXVirtual online exhibition on May 31, peppering online keynote events throughout the one-month event. Intel Executive Vice President and Chief Revenue Officer Michelle Johnston Holthaus led the opening keynote speech, sharing how the rapidly accelerating digital transformation can release a new era of inn...


2021 INTERMACH presents an important platform for business opportunities.</h2>

2021 INTERMACH presents an important platform for business opportunities.

Apr 08, 2021

The 38th edition of INTERMACH presents an important platform for business opportunities. The show features the latest industrial machinery and technology that meet industry's needs today including Automation, Artificial Intelligence (AI), and Robotic Arm technology. There will be advanced machinery technologies that enhance production potential and effectively reduce costs; along with meetings, s...