Taiwan Business Brief – September 2023

DBS Executives, including General Manager Ng Sier Han (second left) mark the completion of the bank’s acquisition of Citi’s retail banking business on August 14.


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

Trade Down, Real Regular Wages up

Taiwan’s exports declined for the 11th consecutive month in July, according to the latest figures from the Ministry of Finance (MOF). The ministry attributed the drop to weak demand among end-users of Taiwan’s products. Exports for the month totaled US$38.7 billion, down 10.4%, while imports fell 20.9% year-on-year (YoY) to US$30.25 billion, resulting in a trade surplus of US$8.5 billion. The MOF said that based on global conditions and demand for emerging technology such as artificial intelligence, Taiwan’s exports may register an uptick in September.  

Partly in response to the weak export figures, the Directorate General of Budget, Accounting and Statistics (DGBAS) adjusted its 2023 GDP growth forecast downward from 2.04% to 1.61%. The agency expects Taiwan’s economy to grow by 3.32% in 2024. Export orders fell 12% YoY to US$47.73 billion in July, according to the Ministry of Economic Affairs (MOEA). However, the export order figure was an 8% increase from June’s. The MOEA cited “huge orders” received by a semiconductor supplier and an electronics distributor, to some extent offsetting overall weak demand. 

Taiwan’s inflation rate for the second straight month remained under the 2% alert level set by the Central Bank, with the country’s consumer price index rising 1.88% YoY in July. DGBAS attributed the increase to additional summer vacation demand for travel and entertainment services, a typhoon that pushed up vegetable prices, and increased global crude oil prices. Growth in the price of services, which includes rent, dining out, education, and entertainment, reached 3.1% in July – the highest on record since 1996, when it reached 3.13%.  

Real regular wages rose in the first six months of the year to an average of NT$45,357, an increase of 2.47% compared with 2022. Monthly earnings, which includes nonregular income such as bonuses and overtime, rose 1.57% YoY to NT$62,008. However, when inflation was taken into account, real regular wages increased slightly by 0.14% YoY, while monthly earnings fell 0.73% YoY, the first drop in seven years. 

Taiwan Carbon Exchange Opens                  

President Tsai launched the Taiwan Carbon Solution Exchange in the southern city of Kaohsiung on August 7. The exchange, established by the Taiwan Stock Exchange and the Executive Yuan’s National Development Fund, will primarily focus on providing consultations regarding carbon fees and international carbon border taxes, as well as promoting carbon neutrality.  

Similar organizations exist in London, New York, Singapore, and Tokyo. Tsai said that carbon emission reduction efforts would generate NT$4 trillion (US$5.9 billion) in private investment and create 550,000 jobs by 2030.  

New Southbound Investment Tops China                  

Taiwanese investment in the 18 countries covered by the New Southbound Policy topped investment in China during the first half of the year, at US$2.12 billion compared to US$1.9 billion. Deputy Economic Affairs Minister Chen Chern-chyi said that the figures reflected an international trend by reducing economic dependence on a single market in the wake of restructuring the global supply chain amid escalating trade tensions between the United States and China. Total investment by Taiwanese companies more than doubled in 2022 to US$5.3 billion.  

TSMC Approves Germany Fab

The board of Taiwan Semiconductor Manufacturing Co. (TSMC) has approved plans to build a factory in Dresden, Germany. The plant is scheduled to commence construction in the second half of 2024 and start production by the end of 2027. It plans to produce 40,000 300-mm wafers monthly.  

A new joint venture, European Semiconductor Manufacturing Co., will be responsible for the factory. The venture will be 70% controlled by TSMC, while the remaining 30% will be evenly distributed between Bosch, Infineon Technologies, and NXP Semiconductors. TSMC’s investment is worth US$3.8 billion and will be the company’s first factory in Europe.  

DBS Completes Citibank Acquisition

Singaporean bank DBS has completed its acquisition of Citibank Taiwan’s retail banking business, increasing its headcount by 3,000, doubling its customer base, and becoming the country’s largest foreign bank. DBS now has 1.1 million banking customers in Taiwan, while credit card accounts number more than 3 million. DBS Group Holdings CEO Piyush Gupta said in a statement that the acquisition had accelerated the bank’s growth in Taiwan by at least 10 years.  

“We will be able to provide more value to our customers, helping them grow their wealth through innovative products, and helping business owners expand into new markets or participate in regional trade flows,” he said.  

The sale did not include Citi’s corporate banking services. Citi announced the sale of its retail business in 14 countries, of which eight are complete, including Taiwan, Australia, Bahrain, India, Malaysia, the Philippines, Thailand, and Vietnam.  

Hon Hai Taps India, Vietnam For Investment

A subsidiary of Hon Hai Precision Technology Co. (Foxconn) has invested US$500 million to increase production capacity in India and Vietnam. The investment in India, totaling US$400 million, will include a factory, R&D center, and related facilities in Hyderabad, Telangana. The factory will be completed by the end of 2024 and will primarily produce AirPods for Apple. The remaining US$100 million will be invested in facilities located in Nghe An, northern Vietnam, that will manufacture wireless headsets, wireless chargers, and headsets.  

Hon Hai’s net profits soared nearly 160% in the second quarter of 2023, largely on the back of non-core investments. The company said that net profits reached NT$33 billion (about US$1 billion) in the same period. Analysts said the company had recouped losses from its investment in Japanese multinational manufacturer Sharp, of which Hon Hai owns 34%.