Taiwan’s export sector likely to receive support in near-term on rising demand for iPhone, says DBS Group Research

Taiwan’s export sector is expected to receive support in the near-term on rising demand in the iPhone supply chains and synchronous recovery across the major markets. From the technical perspective, exports growth should have peaked in September and will ease to single-digit rate in the Oct-Dec period due to an unfavorable calendar and base effects. But this should not disguise the fact that exports are on a moderate but sustained recovery path, DBS Group Research reported.

Exports registered a strong rise of 28.1 percent y/y in September, sharply up from 12.7 percent in August and well above the consensus forecasts in the range of 10-15 percent. This is also the fourth consecutive month of double-digit growth and the highest rate seen since August 2010.

The robust performance could be explained by three reasons. First, manufacturers front loaded shipments ahead of the long holiday in North Asian countries in early-October. Exports to China surged the most by 37.3 percent (vs. 18.2 percent in Aug). Exports to Korea also jumped 32.8 percent (vs. 3.2 percent).

In addition, the iPhone-related demand seems to have kicked in. Exports of semiconductors and other electronics components accelerated to 20.8 percent in September from 14.4 percent in August, with the nominal value hitting an all-time high of USD10.2 billion. Capital goods imports, which are largely comprised of semiconductor equipment, also picked up and returned to positive growth for the first time over five months.

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