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Commercial Times

Focus Report Of Taiwan Machinery Industry Trends And
Global Market Analysis

By Fu-An Chuang / Senior Journalist of Commercial Times

After U.S.-China trade war eases, and the situation of COVID-19 will be under control, we forecast the machinery
industry has reached its bottom, and the fastest get out of in Q2. Affected by the stalemate in the U.S.-China
trade war and corporate investment shrinking to wait and see, Taiwan machinery and equipment exports in 2019
reached US $ 27.7 billion, a decline 7.5% from the same period in 2018. If the export value is calculated in NT$
855.6 billion, a negative growth of 5.7% over the same period last year. Due to the oversupply of the machinery
industry after more than two years of adjustment, the inventory has fallen to a low level. At the beginning of 2020,
although the black swans with COVID-19 and fever has begun, which has impacted global economic growth.
However, it is estimated that COVID-19 will gradually calm down after the weather turns hot. With the take-
off of new technologies such as 5G and AIoT, and the innovative business model of intelligent machinery, it will
ignite a new engine of economic growth. Coupled with the ever-changing need for equipment replacement, the
machinery industry generally judges that this year’s boom is expected to rise quarter by quarter, and then the
production and export value in 2020 still has the opportunity to grow by 5% to 10%.

According to customs statistics, the value of Taiwan machinery industry exports in 2019 reached US $ 27.7
billion, a decrease of about US $ 2.2 billion from 2018. Among the representative markets where exports fell,
Mainland China accounted for 65%, it was ranking the first; and the second is South Korea 9%, Hong Kong 6%,
Turkey 6%, etc. The machine tool industry, which plays the most important role in the machinery industry, it was
also affected by the US-China trade war. In 2019, the total export value of Taiwan machine tools industry reached
US $ 3.064 billion, an annual decrease of 16.2%. Among them, cutting tool machine industry were US $ 2.538
billion, an annual decrease of 17.4%; and molding tool machine industry exports were US $526 million, an annual
decrease of 9.7%.

Looking back at the development of Taiwan machinery industry in 2017, after the first total output value exceeded
NT$ 1 trillion and then reaching NT$ 1.1 trillion, immediately following the Taiwan Association of Machinery
Industry’s efforts to promote the value added development of intelligent machinery and intelligent manufacturing
in all sectors of the machinery industry. The original value of the machinery industry was optimistic. The annual
output value can be increased NT$ 100 billion each year. And the total output value will be advanced to the target
of NT$ 2 trillion by 2025. But it was contrary to what people was expected. In March 2018, the U.S.-China trade
war began, and the two sides fought one after another. The fight was inextricable, and it also hurt the confidence
of global enterprises to continue investing in machinery equipment. The machinery industry has fallen into a
situation where it cannot see orders for more than one year. The embarrassment of the sorrow and cloud has
affected everything, so that we have to reduce various expenses and even offer drastic measures such as letting
employees “take four days off once a week”, or simply take unpaid leave, just to be able to survive the downturn
of the industry.

After entering 2020, many industry opinion leaders and veterans of the machine tool industry originally expected
that the second quarter will start to improve. However, in the period of Chinese New Year, COVID-19 broke
out in Wuhan of Mainland China, and then spread to other provinces in Mainland China and after nowadays
even around the world, it caused COVID-19 to continue to rise and run out of control, which made all kinds of
industries in the world to be fearful.

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