New iPhone launch to buoy Taiwan exports

A jump in orders for semiconductors ahead of the release of Apple’s newest iPhones helped Taiwan post the first gain in exports in a year and a half. The jump may boost growth in the trade-dependent economy.

Exports in July rose 1.2% from a year earlier, the finance ministry said, with electronic goods sent overseas up 5.7%.

A low base last July helped the overall increase. Exports account for two thirds of Taiwan’s GDP, and a recovery in shipments would substantially raise economic growth.

The island reversed three quarters of GDP shrinkage in the second quarter with a gain of 0.7%.

In May, the statistics bureau forecast growth of over 1% for the year. Bank of America Merrill Lynch economists Xiaojia Zhi, Helen Qiao, and Sylvia Sheng expect export growth and favourable base effects to support year-on-year GDP growth in the second half of the year.

The next few months mark the peak season for semi-conductors and telecommunications products, says Anita Hsu, an economist at Masterlink Securities Investment Advisory in Taipei.

Ms Hsu expects exports to grow 5% in the third quarter, since the new iPhone’s release will boost shipments.

Apple could introduce new models to follow the 6S and 6S Plus as early as next month, with more advanced photography capabilities and upgraded hardware.

Apple’s biggest Taiwanese suppliers include the world’s biggest contract manufacturer of microchips, Taiwan Semiconductor Manufacturing, and iPhone assembler Hon Hai Precision Industries, better known as Foxconn.

“We expect the outperformance in electronics to sustain in the third-quarter, as component suppliers ramp up production ahead of Apple’s iPhone 7 launch,” said Angela Hsieh, an economist at Barclays.


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