Chip demand fuels biggest jump in Taiwan exports since 2010

Taiwan’s exports beat estimates as surging sales of semiconductors and other electronic components propelled overseas shipments to the fastest growth in more than a decade.

The value of exports increased 38.7% in April from a year earlier to about $35 billion, the second-highest total and close to the record in March, the Ministry of Finance said Friday. That was stronger than the median estimate for a 27.6% increase in a survey of economists.

Imports gained 26.4%, with the trade surplus widening to $6.18 billion.

The introduction of 5G and digital transformation will drive demand for Taiwan’s tech components until the first half of next year, the finance ministry’s chief statistician Beatrice Tsai said at a briefing Friday. Supply constraints will continue throughout 2021 leading to first-half export growth of up to 20%, the fastest pace in almost a decade, she said.

Exports are likely to rise between 25% and 31% in May, according to Tsai, who also noted that textile exports were boosted by strong demand in April, probably helped by problems with Xinjiang cotton.

Friday’s numbers underscore the rapid rebound in global trade as the U.S. and parts of Europe begin to emerge from the worst of the coronavirus pandemic. Chinese exports surpassed economist estimates in April, rising 32.3% in U.S. dollar terms, while South Korea’s overseas shipments for the month surged more than 41%.

The strength of global demand could propel Taiwan to its strongest economic growth in more than a decade. Economic officials have expressed increasing confidence that full-year growth will likely surpass 5% after first-quarter growth topped 8%. Government statisticians are scheduled to release their latest forecasts on May 28.

Taiwanese companies are investing heavily at home in an effort to keep up with surging overseas demand for technology components, semiconductors in particular. In the past month alone, United Microelectronics Corp and Nanya Technology Corp have both announced new investments worth billions of dollars while Taiwan Semiconductor Manufacturing Co. increased its 2021 capital expenditure target to around $30 billion.

One issue that could potentially hamper output is an ongoing water shortage. The drought may slow export growth from the second quarter onward as companies may be unable to increase chip production, Iris Pang, chief economist for Greater China at ING Bank NV., warned in a note last week. Even in the best scenario, according to Pang, output levels would only be able to stay the same as the first quarter, but even that would be very difficult to achieve.