What Display Daily thinks: The combination of news about depressed PC shipments and Taiwan’s slumping tech sector is worrying because IT displays were supposed to be a safe haven during the general downturn in flat panel demand. Nothing in this report would indicate that to be the case. Taiwanese display vendors, Innolux and AUO, have already signaled their intent to change business models. You have to ask the question, can they do it alone?
Taiwan’s IT Industry Faces Record Slump as Post-Pandemic Demand Wanes
Taiwan’s IT industry is grappling with its most significant downturn to date as the global demand for smartphones and computers experiences a sharp decline following the pandemic. In June, the combined sales of 19 major Taiwanese companies dropped by approximately 20% compared to the previous year, severely impacting component manufacturers, according to Nikkei Asia.
Taiwan Semiconductor Manufacturing Co. (TSMC) reported a 11.1% decrease in June sales, marking the fourth consecutive month of decline. The lackluster capital investment by major US technology firms such as Apple, coupled with weak demand in China for servers, computers, and smartphones, has contributed to the industry’s downturn. While demand surged during the height of the pandemic, it has since subsided.
Although companies like Nvidia are focusing on generative-AI-related chips, the anticipated increase in demand has not materialized thus far. Foxconn, a major supplier to Apple, also faced a significant setback with a 19.7% drop in sales in June, marking the fifth consecutive month of decline.
As the backbone of Taiwan’s economy, the slump in the IT industry has had a profound impact. Taiwan’s real gross domestic product (GDP) for the January-March quarter contracted by 2.87% compared to the previous year, marking the second consecutive quarter of decline following a negative growth rate in the October-December quarter, a phenomenon not seen in approximately seven years.
This downward trend is also reflected in Taiwan’s exports, which experienced a substantial 23.4% decline in June compared to the previous year, the largest drop since the global financial crisis in 2009. However, Beatrice Tsai, the director general of the Department of Statistics at Taiwan’s Finance Ministry, remains cautiously optimistic, suggesting that exports may return to positive year-on-year growth by November.
