Taiwan Electronic Component Production Value Up 5% in First Three Quarters

The accumulated production value of Taiwan's electronic component industry in the first three quarters of the year reached NT$412.1 billion (US$12.26 billion at US$1: NT$33.6), up about 5% from the same period of last year, according to IT IS (Industrial Technology Information Service & Promotion). IT IS is sponsored by Taiwan's government and is operated by the Industrial Economics & Knowledge Center (IEK) of the Industrial Technology Research Institute.

IT IS has forecast that the 2005 production value of Taiwan's electronic component industry is expected to reach NT$585.4 billion (US$17.42 billion), up 7.9% from 2004, with strong growth momentums in the IC substrate, rechargeable battery, and connector segments.

Compound Semiconductors

The production value of the local compound semiconductor sector in the first three quarters was NT$31.06 billion (US$924.29 million), up slightly from the same period of last year, according to IT IS statistics.

Among the major product categories of the sector, laser diodes stood out. Japanese customers have placed increasing contract orders for the laser diodes made in Taiwan to capitalize on their lower prices, IT IS explains.

The production value of light-emitting diodes (LEDs) saw a decline in the first three quarters due to the oversupply caused by local manufacturers' large capacity expansions in late 2004. However, the sector has experienced a more favorable business climate in the fourth quarter, and has even seen orders outstrip supplies for some high-level products.

Passive Components

The production value of the passive component sector for the first nine months was NT$87.04 billion (US$2.59 billion), up about 2% from the same period of last year.

The production value of the sector actually saw a drop in the first half of the year, IT IS says, due to sliding average unit prices and inventory digestion in the international market. During the third quarter, demand began to recover thanks to increasing orders from mobile phone and notebook PC manufacturers. Prices for multi-layer ceramic capacitors (MLCCs) also started to recover in the third quarter, while prices for chip capacitors remained stable.

According to IT IS, the production value of electronic sensors saw a more obvious growth than that of resistors and capacitors because of the steady shipments by major local suppliers.

Most local suppliers of radio frequency (RF) passive devices enjoyed clear sales growth in the first three quarters due to the increasing popularity of their "3025" small-sized models with downstream system makers. Thus, the production value for oscillators saw a growth of more than 20% in the first nine months this year over the same period of 2004.

IT IS points out, however, that because Japanese companies are experiencing a supply shortage for the ceramic caps needed for 3025 oscillators, the rate at which the 3025 models replace their 5032 counterparts is expected to slow.

PCBs Doing Well

The accumulated production value of printed circuit boards (PCBs) was NT$193.51 billion (US$5.76 billion) for the Jan.-Sept. period, up about 5% from a year earlier.

The major growth momentum for the sector came from the IC substrates, IT IS points out. However, a fire at Advanced Semiconductor Engineering Inc.'s plant has led to a supply shortage of plastic ball grid array (PBGA) and FC substrates, the project says, while international price hikes for metal raw materials has resulted in higher prices for some PBGA substrate products.

Most major local PCB makers' production lines were fully occupied to meet increasing orders in the first three quarters. These makers included Phoenix Precision Technology Corp., Kinsus Interconnet Technology Corp., World Wiser Electronics Inc., and Nan Ya Printed Circuit Board Corp.

Compared with the first three quarters of last year, IT IS says, Taiwan's PCB sector enjoyed a 2% growth in value for the rigid-board segment, and suffered a minor decline in the flexible-board segment. Since the third quarter, local PCB makers have seen recovering demand for PCBs for information technology products (such as PC motherboards, notebook PCs, and servers), networking and communication products (such as cell phones and base stations), liquid crystal display (LCD) panels, memory modules, and consumer electronics (such as PDAs and digital cameras). An oversupply of flexible PCBs also began to ease in the third quarter.

Connective Devices

The production value of the Taiwan connective device sector was NT$76.59 billion (US$2.28 billion) for the first three quarters, up about 10%.

IT IS attributes the two-digit growth to the strong demand for connectors for products such as notebook PCs, telecom and communication equipment, digital cameras, game consoles, LCD panels, and MP3 players.

Major Taiwan-based connector manufacturers have continued expanding their production capacities in mainland China, IT IS says, including Hon Hai Precision Ind. Co.'s plant in Kunshan, Jiangsu Province; Wonten Technology Co., Ltd.'s plant in Kunshan; and Plastron Precision Co., Ltd.'s plants in Suzhou and Wujiang, Jiangsu Province.

Energy Devices

According to IT IS, the production value of the energy device sector was NT$23.97 billion (US$713.42 million) during the first three quarters, up about 14%.

IT IS attributes the strong growth to the increasing sales of rechargeable battery products due to heavy demands from the notebook PC and mobile phone sectors.

Because their profit margins for lithium-ion batteries used in mobile phones have been declining, many local battery makers have begun to cash in on the rising demand for batteries in such applications as machine tools and cable modems.