Taiwan Exports at a 14 Year low as Demand Woes
Taiwan’s exports experienced their sharpest decline since 2009 in June, signalling concerns about the global demand slump for electronics and its impact on the economy. Overseas shipments plunged by 23.4% to $32.3 billion, far worse than expected and worse than May’s 14.1% fall. Weak demand for technological goods, especially semiconductors, has posed challenges for Taiwan, which heavily relies on exports.
The decline in imports was even steeper, dropping by 29.9%, indicating weakening domestic demand. The trade balance resulted in a surplus of nearly $6 billion. Factors contributing to the export downturn include a cooling global economy, higher inflation, interest-rate hikes, and a high comparison base from the previous year. While it is uncertain if exports have hit their lowest point, as June is not the peak season for consumer electronics, there are signs of improvement elsewhere. South Korea recorded its first trade surplus in 16 months in June, although exports still declined.
The significant decline in Taiwan’s exports has implications for the global supply chain, particularly in the electronics and semiconductor industries. It highlights the challenges faced by export-dependent economies and the potential impact on companies relying on Taiwanese suppliers. Monitoring market conditions and demand patterns will be crucial for supply chain dynamics in the coming months.
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Micron plans for chip factory in India
Semiconductor company Micron is expanding its global supply chain by setting up a new manufacturing site in India. The facility, Micron’s eleventh worldwide, will cater to global customers as well as the Indian market. The move comes as India Prime Minister Narendra Modi visited the US to discuss co-development and co-production opportunities with President Joe Biden.
The leaders emphasized the signing of a memorandum of understanding on Semiconductor Supply Chain and Innovation Partnership as a significant step in coordinating chip incentive programs and promoting collaboration in key tech industries. This expansion reflects the growing trend among US companies, such as Micron and Apple, to diversify their critical supply chains away from China. Apple supplier Foxconn has already begun constructing a facility in India, and Cisco recently announced plans to manufacture in the country to enhance supply chain diversification.
As geopolitical tensions continue between China and the US, companies are seeking alternative production locations and supply chain diversification to mitigate risks. Micron’s move, along with other major players, will impact the global semiconductor supply chain by reducing reliance on a single country and fostering a more diversified and resilient network.
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SAIC Motors to build European plant
China’s SAIC Motor, the country’s largest car manufacturer, plans to build its first factory in Europe to meet the rising demand for its vehicles on the continent. The new plant will focus on producing electric vehicles, although the specific models, including the iconic MG brand, have yet to be decided. SAIC’s overseas vehicle sales increased by 40% in the first quarter of the year, with MG accounting for the majority of sales in Europe.
This move marks SAIC’s expansion into the European market and follows its decision to shift production of MG cars from the UK to China in 2016. The company is currently in the process of securing a site in Europe and finalizing the project details. The entry of SAIC into the European market will have implications for the automotive supply chain. It will introduce a new player into the region’s electric vehicle manufacturing landscape, potentially increasing competition and diversifying the market.
Additionally, SAIC’s move reflects the growing trend of Chinese automakers expanding their global presence and export capabilities. As China becomes the world’s largest exporter of cars, this expansion will likely impact the supply chain by influencing trade patterns and contributing to the evolving dynamics of the global automotive industry.
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