Taiwan Business Brief – August 2023

Ion Electronic Materials Co. plans to build a factory in the Tongluo Science Park in Miaoli County.


A selection of these news stories are also covered in AmCham Taiwan’s Executive Sweet podcast, available on Apple PodcastsSpotify and online, here.

Exports Decline at 14-Year High        

In June, Taiwan experienced a significant decline in its product exports, reaching a record 14-year high with a 23.4% year-on-year drop. This marked the 10th consecutive month of decline for the country. Despite being a major electronics supplier globally, Taiwan’s export sector has been impacted by the effects of global inflation and interest rate hikes implemented by central banks, leading to reduced demand for electronic gadgets. The Ministry of Economic Affairs has expressed concern, stating that the likelihood of a swift recovery “appears to be diminishing.”

Demand for non-tech products experienced an even more substantial decline, resulting in significant drops of between 30-50% in plastics, chemical, mineral, and textile exports. The prevailing economic uncertainty prompted Taiwanese firms to scale back their purchases of agricultural and industrial raw materials, as well as capital equipment, contributing to a sharp decline of 29.9% year-on-year in imports. Given these weak figures, the Chung-Hua Institution for Economic Research (CIER) has revised its 2023 GDP forecast down to 1.60%. The Directorate General of Budget, Accounting and Statistics (DGBAS) has forecast a CPI growth of 2.04% in 2023. 

Taiwan’s consumer price index (CPI) rose 1.75% year-on-year in June, representing the lowest growth rate since April 2021. This figure falls below the Central Bank’s 2% inflation ceiling target and can be attributed in part to a decrease in fruit and vegetable prices. Despite this, real wages remained stagnant during the first five months of the year. However, there was a notable decline in real earnings for the first time in seven years, reaching a monthly average of NT$58,348.  

In June, the rent index rose 1.98% to a record high of 103.66. June marked the first time in 12 months that the increase has been below 2%. Central Taiwan witnessed the steepest surge in rent, with an increase of 2.59%, while northern Taiwan reported the lowest rise at 1.74%. According to DGBAS, the surge in house prices has led to a shift in consumer behavior, with more people choosing to rent homes instead of buying.  

The Cabinet on July 13 approved an expansion of the mortgage subsidy program for first-time buyers, raising the maximum loan amount from NT$8 million to NT$10 million and extending the repayment term from 30 to 40 years. To curb speculation in the housing market, the Cabinet has also announced plans to increase the annual tax on vacant residential properties from between 2% and 4.8%.  

Taiwan’s China Exposure Down                      

According to the Financial Supervisory Commission (FSC), exposure of Taiwan’s banking, insurance, and securities firms and mutual funds to China totaled NT$1.49 trillion (US$47.56 billion), a 17% decrease compared to a year earlier. Exposure to China, specifically loans and investments, fell NT$180.7 billion to NT$1.05 trillion at the end of May.  

The FSC attributed this trend to several factors, including downside risks to China’s economy, trade tensions between the U.S. and China, and growing risks among local-level Chinese enterprises. Taiwanese enterprises have relocated their investments from China to Taiwan, India, and Southeast Asia to further diversify their exposure to risks associated with the Chinese market.  

ASML Linkou Fab Receives Approval

Dutch multinational semiconductor equipment supplier ASML Holding received approval from New Taipei City’s Urban and Rural Development Department for its NT$30 billion manufacturing fab in the city’s Linkou District. The facility is set to start operations in 2026 and will house around 2,000 employees. ASML is the sole supplier of extreme ultraviolet lithography tools to Taiwanese manufacturers for advanced chips.  

The New Taipei City government plans to support the project to achieve net-zero emissions, accelerating the process. The factory aims to capture 12 metric tons of carbon annually through tree planting and other measures. Linkou aims to become an AI and smart technology hub, with ASML being the first tech company to establish its presence. The city plans to attract other companies in AI, 5G, big data, and analytics. 

IEMC to Build Miaoli Factory

Ion Electronic Materials Co. (IEMC), an electrochemical specialty gas supplier, announced plans to invest NT$1.2 billion to build a factory in Miaoli County. The company has acquired 2.4 hectares of land in the Tongluo Science Park and will initiate the facility’s first operation phase later this year. 

Taiwan heavily relies on specialty gas imports from the U.S., Europe, and Japan. IEMC is one of the few domestic suppliers providing specialty gases crucial for semiconductor and display manufacturing. Since its establishment in 2016, the company has been a key supplier of cleaning and lithography gases to major foundries and memory chip makers in Taiwan. The new facility is expected to broaden IEMC’s product portfolio and support the government’s efforts to improve Taiwan’s supply chain resilience in the semiconductor and display industries. 

Airlines Report Record Gains 

Taiwan’s two largest international air carriers, China Airlines (CAL) and EVA Airways, reported record revenue in June due to a notable increase in travel demand. CAL’s revenue increased 42.13% year-on-year to NT$17.54 billion.  

Similarly, June saw the best monthly performance in EVA Airways’ history, with a 59.38% increase year-on-year to NT$17.64 billion. The airline reported that the average load factors for flights from Taiwan to Europe and the U.S. surpassed 90%. This achievement significantly contributed to the nearly tenfold increase in passenger revenue compared to 2022. 

In addition, United Airlines plans to double the number of direct flights between Taipei and San Francisco to 14 per week starting October 30. The added flights (UA852 and UA853) will use Boeing 777-200ER aircraft and are part of United Airlines’ network expansion plans across the Pacific.