Consumer electronics demand drops – Taipei Times

‘NO HIGH SEASON’:
Semiconductor manufacturers saw an uncharacteristic slowdown in export orders, as indicated by dips in energy demand, the TRI said

• By Crystal Hsu / Staff reporter

A decline in power consumption by the industrial and service sectors last month widened to 2.69 percent, indicating the economy entered a slowdown, as local firms take a hit from inventory corrections, the Taiwan Research Institute (TRI, 台灣綜合研究院) said yesterday.

The electricity prosperity index (EPI), which the institute uses to gauge the health of industrial sectors, found that energy consumption dropped 2.69 percent from a year earlier, accelerating from a 0.24 percent retreat one month earlier, affirming a downturn at odds with traditional seasonal changes, the New Taipei City-based institute said.

The third quarter is normally the high season for Taiwan’s semiconductor manufacturers, which supply a majority of the world’s chips used in high-performance computing, laptops, big data analysis, automobiles and Internet of Things applications.

Photo: Reuters

“There is no high season this year in light of the EPI trend, which should come as no surprise after both exports and export orders faltered to contraction zone,” TRI president Wu Tsai-yi (吳再益) said.

The EPI flashed the first “yellow-blue” climate signal this year, bringing the cycle of steady growth to an end, Wu said.

Drastic monetary tightening by the US and Europe helped curtail demand for consumer electronic gadgets and upset financial markets worldwide, Wu said.

That helped explain why high-voltage electricity usage dropped 1.94 percent from a year earlier, while power consumption fell 2.36 percent among all manufacturers, and was down 0.06 percent among service providers, the institute observed.

Inventory adjustments also hit top local semiconductor companies, which ?— while they are the biggest electricity users — have softened demand in the past two years, it said.

“Now they appear to have spare capacity due to order cancelations,” in contrast with lines of undigested orders, Wu said.

Wu also voiced concern that US-China trade disputes could escalate and affect local chipmakers’ business outlook. The world’s two largest economies account for more than 50 percent of Taiwan’s exports.

Policymakers must pay close attention to how the disputes pan out, Wu said.

In addition, the slight retreat in power consumption by service providers showed that the high season induced by the summer vacation is over, the institute said.

It remains to be seen whether Taiwan’s reopening to foreign tourists earlier this month would be the much needed catalyst to revive tourism sectors, it said.

The TRI trimmed its forecast for GDP growth for last quarter to 3.5 percent, down from the 3.7 percent it predicted one month earlier. The value is significantly lower than a 4.71 percent increase the Directorate-General of Budget, Accounting and Statistics projected in August.