Taiwan's chip exports sputter on US-China tensions, falling demand

Taiwan’s exports of integrated circuit chips to China and Hong Kong fell for a fourth month in February as Washington-Beijing tensions simmer and demand for electronics continues to drop off. 
 

Exports of IC chips — which are pivotal components of electronic appliances, computers and smartphones — to China and Hong Kong dropped 31.3% from a year earlier, according to data from Taiwan’s Ministry of Finance. It was the worst decline since 2009, topping January’s 27.1% fall.

China’s market share of Taiwanese IC exports plunged to the lowest level since February 2019, based on Bloomberg calculations of official data. 

The total amount of semiconductors Taiwan shipped worldwide declined 17.3% last month from a year ago. Exports to the US jumped 22.3%. 

Taiwan is the world’s largest producer of cutting-edge chips, and demand has cooled rapidly for that advanced technology that has bolstered its economy. Taiwan is also a geopolitical hotspot, contributing to the fall.

As China has tried to develop its own advanced technologies, the US has moved to block the world’s second-largest economy from doing so. In January, the Biden administration secured an agreement with the Netherlands and Japan to restrict exports of some advanced chipmaking machinery to China.  

Chinese President Xi Jinping recently railed at US efforts to hinder its technology progress, rallying his country’s private sector to help overcome “containment” by the US and other countries — a rare direct criticism of China’s biggest trading partner.

US President Joe Biden has also repeatedly stated that Washington would defend against a Chinese attack of Taiwan, comments that have angered Beijing.

Breakdown of Taiwan’s chip-related exports
	Feb.	Jan.	Dec.	Nov.	Oct.	Sept.	Aug.	July
	2023	2023	2022	2022	2022	2022	2022	2022
	YoY%
Integrated circuits	-17.3	-18.3	0.8	-3.4	19.4	3.5	14.3	17.4
China & Hong Kong	-31.3	-27.1	-4.4	-13	13.8	0.2	7.1	13.2
China	-30.4	-22.7	1.6	-13.9	44.2	-10.4	29.6	35.3
Hong Kong	-32.3	-32.6	-11.1	-11.9	-18.2	13.4	-15.8	-6.1
Semiconductor facilities	14.6	-37.5	13.2	5.3	4.9	0.2	4.2	19.3
Chip-making machines	3.2	-42.8	7.5	-3	-1.8	0.6	-2.3	21.2
China & Hong Kong	-32.8	-51.9	-12.3	-42.6	-29.3	-17.5	-19.8	-3.7
China	-33.2	-51.7	-13.2	-42	-29.3	-17	-19.3	-3.2
Hong Kong	36.9	-77.7	57.1	-75.3	-26	-58	-52.2	-34.6

 

USD Millions
Integrated circuits	11,993	11,787	14,914	13,927	15,620	15,640	15,691	15,518
China & Hong Kong	6,133	6,226	8,568	7,637	8,659	9,494	8,806	8,718
China	3,176	3,654	4,818	4,126	5,621	4,707	5,373	4,856
Hong Kong	2,957	2,571	3,750	3,511	3,038	4,787	3,433	3,863
Semiconductor facilities	451	389	620	502	580	493	585	636
Chip-making machines	317	299	450	356	427	376	450	502
China & Hong Kong	74	91	152	92	126	122	158	191
China	74	90	148	91	125	121	156	189
Hong Kong	1	0	4	1	1	1	1	2
China & Hong Kong	-32.8	-51.9	-12.3	-42.6	-29.3	-17.5	-19.8	-3.7
China	-33.2	-51.7	-13.2	-42	-29.3	-17	-19.3	-3.2
Hong Kong	36.9	-77.7	57.1	-75.3	-26	-58	-52.2	-34.6

Note: Semiconductor facilities refer to equipment in the semiconductor manufacturing process. 

Source: Ministry of Finance, Republic of China.