iPhone 6: Driving Taiwan's continued economic growth

The launch of new technology products such as Apple's iPhone 6 will help Taiwan maintain its position as Asia's export leader and continue to support Taiwan's economic growth as the global economy fully recovers.

Taiwan released its 2014 GDP outlook last week, and export orders released on Wednesday provided more evidence that the outlook for Taiwan's trade-reliant economy has improved significantly. A manufacturing survey in July showed new export orders growing at the fastest pace since January 2011. Taiwan's raising of its growth forecast is unusual as many parts of North Asia have lowered their growth forecasts and introduced stimulus measures to boost their economies.

Reuters analysis showed that Taiwan's export orders in July increased by 7.3% from the same period last year, while the growth rate in June reached 10.6%, far exceeding expectations and the fastest growth rate in a year and a half.

Supporting the strong growth in Taiwan's export sector is the upcoming release of Apple's latest smartphone. Apple is expected to launch the iPhone 6 in the fall, and Taiwanese companies are manufacturing a large number of components and accessories for it. "It is usually not until three to six months after a new product is released that it reaches critical mass," said Wai Ho Leong, a regional economist at Barclays Bank. Demand builds gradually, first reflected in orders and then in actual exports.

The technology industry has become a major driver of Taiwan's exports, but it faces a dramatic change as global user tastes continue to change, with bulky computers giving way to sleek handheld devices. To adapt to the changing trend, many Taiwanese contract manufacturers have begun to produce high-end chips for smartphones and other digital devices. Economists expect the momentum to continue into the second half of this year, although it is too early to tell how many orders will translate into actual exports. Export order data includes Taiwan's factories outside, such as in China, while actual exports only count shipments within the island.

At a time when manufacturing growth is slowing in South Korea and Japan, Taiwanese manufacturers have signaled that overall industry conditions will improve significantly. Taiwan's semiconductor industry is looking bright due to strong external demand for mobile devices, and the Taiwan Statistics Bureau has raised its economic growth forecast for the island.

China and Hong Kong together account for 40% of Taiwan's exports, and the United States is also one of the largest export destinations for Taiwanese products. Many Taiwanese companies produce and assemble products in mainland factories before exporting them. Taiwan's export orders are seen as a leading indicator of Asian exports and demand for high-tech equipment, and are usually released 2 to 3 months before they are converted into actual exports. However, in the highly competitive consumer electronics industry, orders can be quickly converted into production, which means that July's orders are likely to not fully reflect the demand trend of new products.

Tieying Ma, an economist at Singapore's DBS Bank, cited last year's base effect as a reason for Taiwan's slower growth in July, but she still believes export order levels will remain strong even if annual growth slows to 5% to 8%.

Taiwan's total orders in June exceeded $38.8 billion, a trend that has continued for four months. Taiwan-made semiconductor products occupy an important position in the global technology supply chain, due to machinery, electronic products and consumer electronics. Jimmy Chen, an analyst at Masterlink Securities in Taiwan, said that these chips and parts assembled into handheld mobile devices have become the mainstay products in export orders. He believes that demand related to smartphones will be reflected in sales data in August.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.