Taiwan Business Briefs – December 2024

By Nikki Dong & Alex Myslinski

Growth Forecasts Rise, Exports Boom

The International Monetary Fund projects Taiwan’s economic growth rate this year to be around 2.2%, indicating a cautiously optimistic outlook as Taiwan navigates external economic pressures and domestic recovery initiatives. The Directorate General of Budget, Accounting and Statistics (DGBAS) forecasts a growth rate of 4.27%, up from last year’s 1.55%, while the Chung-Hua Institution for Economic Research has raised its forecast to 3.96%, citing booming demand for AI applications.

Other institutions have also revised their forecasts, largely due to Taiwan’s significant export growth this year, according to the National Development Council. Chang Chien-yi, president of the Taiwan Institute of Economic Research, noted strong indicators for achieving a target of 3% economic growth for next year. Chang added that if U.S. President-elect Donald Trump delivers on his promise to end the Russia-Ukraine conflict, it could ease global inflation and spur demand worldwide.

Retail sales rose by 3.2% year-on-year (YoY) in September but declined by 0.5% YoY in October to NT$410.9 billion, according to the Ministry of Economic Affairs (MOEA). The ministry attributed the decline primarily to the landfall of two typhoons. Additionally, falling oil prices contributed to a 10.2% YoY decrease in sales at gas stations. Despite the setbacks, cumulative sales for the first 10 months of the year reached NT$3.98 trillion, a 2.6% increase from the same period last year and the highest on record.

Taiwan’s consumer price index (CPI) showed a modest increase of 1.9% YoY in October, driven by higher prices in the food and energy sectors.

Export orders increased by 4.5% YoY to US$55.45 billion in October, rising for the eighth consecutive month and marking the highest level since September 2022, according to MOEA.

Orders for electronic products, including semiconductors, registered the fastest annual growth of 11.2% to US$20.91 billion in October. Information and communications technology products also saw orders climb 0.5% annually to US$17.58 billion, thanks to robust demand for servers and networking equipment. However, orders for optronic products dipped 0.7% to US$1.66 billion due to falling prices of TV display panels. Orders for base metals rose 7.4% YoY to US$2.13 billion through rising demand for steel products.

TSMC Arizona Production Faces Uncertainty

The U.S. Department of Commerce on November 15 finalized a US$6.6 billion subsidy to the Taiwan Semiconductor Manufacturing Co. (TSMC) to help support its massive chip production project in Phoenix, Arizona. This agreement, part of the CHIPS and Science Act, aims to bolster domestic semiconductor manufacturing in the United States. TSMC plans to invest a total of US$65 billion in Arizona, including the construction of three fabrication plants by 2030. TSMC announced that its second Arizona fab could begin producing 2-nanometer chips as early as 2028, advancing from the previously planned 3-nanometer production. However, Taiwan’s Minister of Economic Affairs J.W. Kuo noted that current Taiwanese technology protection regulations prohibit TSMC from manufacturing 2-nanometer chips abroad until domestic facilities have advanced further, potentially impacting the timeline.

TSMC Launches Zero-Waste Center

TSMC launched its first zero-waste center on November 13, marking a significant step in its ongoing efforts toward sustainability. The facility will focus on minimizing waste and incorporating circular economy practices, further advancing TSMC’s environmental goals. This initiative aligns with TSMC’s broader commitment to achieving net-zero emissions by 2050 as part of its green manufacturing strategy.

The Taichung Zero Waste Manufacturing Center features four major recycling facilities, including fluoride recycling, silica recycling, solvent thermal recovery, and isopropanol recovery. The center could reduce TSMC’s outsourced waste processing by 130,000 metric tons per year, accounting for more than 85% of the total waste from TSMC’s facilities in the Central Taiwan Science Park, said TSMC co-chief operating officer Y.P. Chyn at the launch ceremony held in Taichung.

In addition, TSMC and the Ministry of Environment signed a memorandum of understanding to jointly develop membrane carbon capture technology for introduction into general waste thermal treatment facilities.

Golden Merchant Awards Uplift Multinationals

At the 2024 Golden Merchant Awards, held on November 1, several international companies were honored for their contributions to Taiwan’s economy and society. Amway, Baxter, DKSH, and Edwards Lifesciences, nominated by AmCham Taiwan, were all recipients of the Outstanding Foreign Businessman award. In addition, AmCham members BASF, Diageo, Mars, Novo Nordisk, Standard Chartered, and Volkswagen Group received the same special recognition.

The awards ceremony acknowledged the achievements of foreign companies and highlighted the growing importance of international business collaboration in Taiwan’s economic landscape.