Taiwan's Machinery Industry Saw Output Slow Down in Q3

Taipei, Nov. 10, 2005 (CENS)--After experiencing two years of growth, Taiwan's machinery industry saw a slowdown in output in the third quarter of this year, according to statistics compiled by the Industrial Economics and Knowledge Center (IEK) under the government-backed Industrial Technology Research Institute (ITRI).

Overall output of domestic machinery industry amounted to NT$279.2 billion (US$8.3 billion at US$1:NT$33.6) in the first half of the year, up 10.2% from the same period of last year. But the output value saw an annualized decline of 5.5%, or a sequential drop of 12%, to reach NT$133.2 billion (US$3.96 billion) in the third quarter alone.

Based on the performance in the first three quarters, IEK estimated the industry's production value will grow 6.9% annually to hit NT$580 billion (US$17.26 billion) for the entire year.

The IEK tallies showed Taiwan's machinery industry has maintained a growth trend for 45 months since January 2002, with the monthly output value peaking at NT$52.6 billion (US$1.56 billion) in December last year. Since that time, the industry has witnessed an unsteady growth.

Overall output of Taiwan-made made machine tools amounted to NT$40.1 billion (US$1.19 billion) in the first half of this year, including NT$28.4 billion (US$845.23 million) for metal-cutting machine tools, NT$10.3 billion (US$306.54 million) for metal-forming machine tools, and NT$1.4 billion (US$41.66 million) for electric discharge machines. IEK predicted the machine-tool sector would see output reach NT$85.1 billion (US$2.53 billion) this year, up 3.7% from last year's NT$82 billion (US$2.44 billion).

The output value of plastics and rubber processing machinery grew 41.5% year-on-year to reach NT$25.2 billion (US$750 million) in the first half of this year. IEK predicted the sector would grow 39.7% annually to reach NT$52.9 billion (US$1.57 billion) this year.

Overall output for electronics and semiconductor production equipment is expected to maintain a high-level year-on-year growth of 23% to reach over NT$30 billion (US$892.85 million) this year. Thanks to the government's efforts to encourage domestic producers of thin film transistor-liquid crystal display (TFT-LCD) to procure domestically made production equipment, the automation and conveyor sector is expected to see output grow 14% to reach NT$27.8 billion (US$827.38 million) this year.

IEK said domestic automation system providers would see a brighter future as they have accumulated much experience in helping domestic manufacturing firms launch systematic integrated engineering.

Exports of Taiwan-made machinery to mainland China, the largest export outlet, seemed to have subsided. For instance, Taiwan's overall exports of machine tools still maintained a 17% annual growth to reach NT$39.3 billion (US$1.16 billion) in the first half of this year, and will see an 11% year-on-year growth to hit NT$82.3 billion (US$2.44 billion) for the entire year. Nevertheless, the sector saw an annual decline of 3% in the third quarter of this year, due mainly to a substantial decline in exports to the mainland. IEK's tallies showed exports of machine tools to the mainland declined by 13.5% year-on-year to reach NT$7.7 billion (US$229.16 million) in the third quarter. IEK predicted exports of machine tools would show a flat performance to reach NT$33.5 billion (US$997.02 million) for the entire year.

Despite the decline in exports to the mainland, Taiwan's machine-tool manufacturers have been making all-out efforts to diversify export outlets. As a result, exports of machine tools to the U.S. totaled NT$3.7 billion (US$110.11 million) in the first half of this year, up a whopping 44% from the same period of last year. IEK estimated exports of the products to the U.S. would grow 20% annually to reach NT$7.7 billion (US$229.16 million) this year.

Europe is another high-growth market for Taiwan-made machine tools. IEK said exports of the products to the Netherlands would grow 41% year-on-year to reach NT$2.4 billion (US$71.42 million) this year.

Although South Korea is seen as one of Taiwan's strongest rivals, domestic machine-tool manufacturers have scored outstanding sales performance in that market, especially in terms of exports of machining centers and electric discharge machines. IEK's statistics indicated Taiwan exported NT$1.1 billion (US$32.73 million) worth of machine tools to South Korea in the first half of this year, up 56% year-on-year. Exports of machining centers to the country amounted to NT$400 million (US$11.9 million), and EDMs NT$120 million (US$3.57 million). IEK predicted exports of machine tools to South Korea would grow 54% annually to reach NT$2.4 billion (US$71.42 million) this year.

Export Value of Taiwan-Made Machine Tools Unit: NT$ million
Major Outlets	Q3, 2005		2005
	Export Value	Annual Change	Export Value	Annual Change
Mainland China	7,705	-13.5%	33,500	-0.8%
United States	1,782	2.7%	7,747	19.6%
Turkey	1,092	-13.1%	4,747	10.2%
Thailand	756	-3.1%	3,287	2.7%
South Korea	556	23.3%	2,419	54.3%
Netherlands	549	15.2%	2,388	41.2%
Total	18,933	-3.1%	82,318	11.1%
Source: Industrial Economics and Knowledge Center, ITRI