Taiwan's machinery industry in numbers

Taiwan's machinery exports between January and July continued to show an upward growth trajectory, reaching USD$18.556 billion, a 28.1% year-on-year growth, reported the Taiwan Association of Machinery Industry (TAMI). That would be $522.562 billion in Taiwan dollars, a 20.4% annual growth, marking a record high in the same period. Moreover, machinery exports have maintained double-digit growth for seven consecutive months, a clear indicator of strong demand in the industry.

In a press conference reporting the latest industry figures, TAMI Chairman Wei Tsan-wen said single-month export values in July reached USD$2.801 billion (33.8% yearly growth), equaling NTD$78.111 billion, a 26.2% yearly growth. July maintained the 11-month steady growth that kicked off from September 2020 and would be the second-highest monthly figure this year, just behind May's NTD$2.915 billion.

In the first seven months of this year, the top three products exported were electronic equipment at USD$2.779 billion, accounting for 15% and an annual increase of 44.6%; inspection equipment at USD$2.52 billion, accounting for 13.6% and a yearly increase of 24.9%; power transmission items at USD$1.498 billion, accounting for 8.1% and a yearly increase of 45.6%. In the same time frame, the top three export destinations were China in first place, valued at USD$6.027 billion and accounting for 32.5% of all exports and a yearly increase of 39.4%; the U.S. in second, at USD$3.882 billion, accounting for 20.9% and a yearly increase of 22.6%, and Japan in third, with USD$1.183 billion, accounting for 6.4%, and an annual increase of 13.5%.

In July, the top ten products of machinery exports virtually had double-digit growth. Electronic equipment exports were at first place with USD$414 million, an increase of 40.9%; inspection and measurement equipment accounted for USD$381 million, an increase of 26% in second place; power transmission items at USD$229 million in third place, an increase of 37.4%; machine tools at USD$222 million in fourth place, an increase of 35.8%.

Major domestic machine tools and component plants also performed well in July. For example, Goodway Machine reported NTD$560 million in revenue for July, an annual increase of 17.9%, while its first seven months' revenue was at NTD$3.83 billion, an annual increase of 31.6%. Another reputable supplier, Tongtai, reported July revenue at NTD$980 million, a yearly increase of 67.4%, and revenue for the first seven months reached NTD$5.72 billion, an annual increase of 27.1%.

AirTAC's July revenue was at NTD$2.25 billion yuan, an annual increase of 28.4%, and the previous July's revenue was 15.22 billion yuan, an annual increase of 48.5%; Shanghai Bank's July revenue was 2.5 billion yuan, an annual increase of 22.4%, a two-and-a-half-year high In the first seven months, revenue was 15.54 billion yuan, an annual increase of 37.7%.

Challenges Ahead

However, growth for the sector is affected by the strengthening Taiwan dollar, Wei had warned. Since the beginning of 2021, the NT dollar has risen by 2.03 percent against the US dollar, compared to the Chinese yuan's 1.07 percent increase, a 6.11 percent decline in the value of the won, and the 5.87 percent fall in the value of the yen. Any profits gained in this period would be severely impacted by exchange loss.

In terms of raw material shortages, rising prices, and longer lead times, Wei pointed out that the government's recent intervention into the rising steel prices situation was largely stabilized after meeting with China Steel Corporation and related industry associations. Through China Steel's attempts to prioritize supply to the domestic market and stabilizing markets, the local price hike situation has largely leveled out, though the same could not be said for steel prices overseas, Wei warned.

On the other hand, the Delta-variant-fueled surge of the latest COVID-19 outbreak has introduced new reservations into this year's economic growth. Moreover, the situation abroad has furthered impacts on exports, container shortages, and rising shipping prices, making it harder for larger-sized machinery suppliers to do business.

Wei had urged government intervention to help domestic supplier representatives obtain vaccines should they travel overseas for business, ensure product delivery and maintenance.