Global trade data in the Covid-19 era has been generally abysmal, but look a little closer and the electronics sector that fires Asia’s trade engines could be headed for a pretty good year.
In South Korea, semiconductor exports rose in May and imports of equipment used in producing semiconductors surged 168%, trade ministry data show. Taiwan’s electronic-component exports, which include chips, grew 13.2% in May to $10.2 billion, even as total exports fell 2% from a year earlier.
The electronics industry is holding up relatively well amid the pandemic as companies adopt new technologies — including 5G equipment and automation tools — that make it easier for employees to work remotely. A sustainable boost will depend on whether consumers return with similar vigor, and whether other factors such as U.S.-China tensions don’t interfere with digital demand and supply.
“The tech industry seems to have decoupled from the overall economy somewhat, as the tech industry is still growing well” and has been “relatively immune to Covid-19,” Mark Liu, chairman of Taiwan Semiconductor Manufacturing Co., said at a shareholder meeting June 9.
TSMC, the main chipmaker for Apple Inc. and Huawei Technologies Co., still plans to spend as much as $16 billion on capacity upgrades and technology this year, and expects revenue gains in the mid- to high-teens, Liu said. Covid-19 has helped drive some budding technologies related to remote work and education and social distancing, he added.
TSMC shares have risen 27% since their lowest close for the year on March 19, slightly less than the 32% gain in Taiwan’s benchmark Taiex stock index in that time.
Amid generally awful export figures from the region, “the one bright spot is semiconductors,” said Trinh Nguyen, a senior economist at Natixis SA in Hong Kong. “A lot of this reflects the product cycle and also the global lockdown and suppression that favor the ‘digitalization’ of economic activities, driving demand for electronic goods like chips.”