Increasing global chip demand pushes Taiwan’s export orders to record high

Global demand for semiconductors, fueled by 5G and high-performance computing, showed little sign of easing off as Taiwan’s searing pace of export orders continued for a fifth straight month.

Export orders grew 33.3% to $53.7 billion in March, Taiwan’s Ministry of Economic Affairs said on Tuesday. Economists had forecast an increase of 34.9% in a Bloomberg survey. The data for March set a record high for the month.

Officials see the strong growth continuing for a sixth month, with the ministry predicting orders will increase by between 29.8% and 33.7% in April.

Also read: TSMC sees chip shortage lasting into 2022, books solid profit

Demand from end-users is returning as the global pandemic begins to ease, the ministry said in its statement. Components needed for remote-working devices, 5G equipment, high-performance computing and vehicles bolstered growth in orders.

The numbers are the latest sign Taiwan is emerging strongly from two years of uncertainty following the U.S.-China trade war and the global pandemic. The National Development Council’s monitoring indicator, which tracks an index of forward-looking data such as exports, share prices and money supply, rose to its highest level since 1989 in February, indicating Taiwan’s economy is in boom territory.

Taiwan’s largest company, Taiwan Semiconductor Manufacturing Co., warned last week that a global shortage of computer chips in industries from automaking to consumer electronics may extend into 2022, meaning the company and its peers will likely see little let up in demand in the coming months.

Read more: Global chip supply chain increasingly vulnerable to massive disruption: Study

TSMC also raised its sales guidance for the second quarter, predicting revenue will grow 20% in dollar terms year-on-year.

One headwind for exporters could come in the form of a stronger local currency. The Taiwan dollar posted its biggest two-day advance this year, strengthening 0.8% versus the U.S. dollar this week after a report by the U.S. Treasury indicated that the Biden administration could exert greater pressure on the central bank in Taipei to allow the currency to appreciate. The report labelled the Taiwan dollar “structurally undervalued.”

The ministry will continue to support companies in traditional industries to upgrade their products and operations to better withstand the impact of a stronger currency, Huang Yu-lin, director of the ministry’s statistics department, said after the release of Tuesday’s data.