While global economies are being throttled by the pandemic, Taiwan exports rose 11.2% from a year earlier to a record of $32.2 billion in October. How did it happen?
Taiwan’s Ministry of Finance (MOF) attributes the growth to the buoyant demand for electronic goods, new technologies like 5G telecommunication networks, and shopping season sales. As people spend more time at home, they seek devices for home entertainment, online learning, and telecommuting.
In October, Taiwan saw a 20.8% increase in exports of work-from-home essentials like wireless keyboards and headphones, 21.8% for electronic components and 22.2% for semiconductors. Exports of information and audio/video devices reached a new high of $4.64 billion for October, comprising 14.4 percent of the month’s total exports.
The ministry cited a “comprehensive expansion” in exports to the country’s top markets. Exports to the U.S. and Japan grew an annual 21.4% and 4.8% respectively.
Some analysts point out that Taiwan’s tech sector benefits from the trade tensions between the U.S. and China. The U.S. prohibits trading between American companies and Chinese tech giant Huawei Technologies, which the White House considers a national security threat.
Chinese companies like Huawei, stockpiled advanced semiconductors made in Taiwan to rely less on the U.S. This trend is what analysts describe as a path towards self-reliance.
Almost one third ($27.2 billion) of Taiwan’s 90 billion in exports went to China in the third quarter of 2020. Chinese importers purchased more than one-third of the $32.9 billion in exports from the semiconductors category.
Who benefits from the exports boom?
For the third quarter 2020, Taiwanese PC maker Acer has posted a profit of $80 million on revenue of $2.8 billion. The company’s Chromebooks segment rose 94% while gaming hardware increased 70%.
According to research from Canalys, 9.4 million Chromebooks were sold in Q3 2020 alone. Rival Apple sold about 6.9 million macOS devices during the same time.
Acer’s rival Asustek Computer – better known as Asus – posted a $227.6 million net income for the first half of 2020, an increase from $185 million in the first half of 2019.
Acer is the world’s fifth largest PC developer by market share and Asus sixth, according to research and advisory company Gartner. Acer exported 5.1 million PCs in Q3 2020, while Asustek delivered 4.9 million.
The global smartphone market saw a 32% increase in the third quarter. This is an opportunity for Taiwan-based HTC, which develops phones, and top chipmakers like MediaTek and Taiwan Semiconductor Manufacturing Co. (TSMC) that create smartphone semiconductors. TSMC, the world’s biggest contract chipmaker, saw 22% of its net revenues come from China, up from 21% in the previous quarter, a company publicist said.
Taiwan’s economic recovery
Positive financial results from companies like Acer drive bullish forecasts for Taiwan’s GDP this year. The government forecasts a 1.56% GDP gain. And with 12.1 percent Taiwan’s November exports grew at their strongest year-on-year pace since January 2013.
Analysts say that Taiwan is reaping the economic benefits of its successful coronavirus pandemic response. This includes close monitoring of flights, a strict quarantine system, and contact tracing. With this, businesses and retailers in Taiwan were not forced to shut down. Low Covid-19 rates have allowed people to continue studying and working.
“Taiwan’s economy is set to glitter while the world dithers in the dark,” the French investment bank Natixis said in an October 29 research note. “Domestic demand has also remained robust as Taiwan has the least reduction in local mobility in Asia thanks to the early pandemic control measures.”