Manufacturing sector’s fixed investments up almost 40% in Q2

Taipei-The amount of investments in fixed assets made by Taiwan's manufacturing sector for the second quarter of this year jumped almost 40 percent from a year earlier partly because Taiwanese semiconductor manufacturers were gearing up to invest in high-end processes, according to the Ministry of Economic Affairs (MOEA).

The MOEA said the increase in fixed investments, which refer to funds poured into plants, machinery, equipment and other durable capital goods but excluding the purchases of land, also came after many local manufacturers with operations overseas, in particular in China, allocated more resources back to Taiwan to avoid the impact from trade frictions between the United States and China.

Data compiled by the MOEA showed the local manufacturing sector's fixed investments for the second quarter stood at NT$339.7 billion (US$10.89 billion), up 38.2 percent from a year earlier, the highest growth since the fourth quarter of 2010.

The second quarter figure also rose 4.7 percent from the first quarter, the data indicated.

In the first half of the year, the sector's fixed investments rose 33.6 percent from a year earlier to NT$664.2 billion, the MOEA said.

It added that investments in machinery and miscellaneous items hit NT$279.1 billion in the April-June period, up 43.6 percent from a year earlier and also up 2.4 percent from a quarter earlier.

The spending even accounted for more than 80 percent of the manufacturing sector's total fixed investments in the second quarter, the MOEA added.

It said Taiwanese semiconductor producers had scrambled to buy production equipment and build factories to upgrade their technology and expand production capacity in high-end processes for a larger share of the global market.

The local electronics components industry, including semiconductor providers, was the largest spender in the second quarter, investing NT$211.9 billion in fixed investments, up 53.9 percent from a year earlier and making up more than 60 percent of the manufacturing sector's total.

Meanwhile, fixed investments made by the local chemical, metal and computers/optoelectronics makers for the second quarter rose 11.4 percent, 79.2 percent, and 7.2 percent, respectively, from a year earlier to NT$20.1 billion, NT$13.5 percent and NT$12.2 billion, the data showed.

The high growth enjoyed by the metal industry partly reflected an increase in investments by offshore wind power developers, the MOEA said.

Bucking the upturn, local machinery makers saw their fixed investments for the second quarter falling 5.8 percent from a year earlier to NT$9.7 billion in the wake of a high comparison base over the same period of last year, the MOEA added.

Despite the increase in fixed investment in the manufacturing sector overall, the MOEA said revenue generated by the sector for the second quarter fell 2.0 percent from a year earlier to NT$6.66 trillion.

It said the fall came after the on-going trade disputes between Washington and Beijing dragged down global demand. A weakening pricing power suffered by memory chipmakers and flat panel suppliers also sent sales lower as a result of a global supply glut.

Looking forward, the MOEA said that due to the continued efforts in new technology development and the improved willingness of Taiwanese firms to invest at home amid the global trade war, fixed investments by the manufacturing sector are expected to continue to grow.

In addition, sales posted by the sector for the second half of this year could pick up as the global electronics industry has entered a peak season for the year, the MOEA said.

Source: Focus Taiwan News Channel