Japanese Media: The Recovery of Taiwan IT Industry Comes to a Halt

16 Aug

As The Nikkei reported, the sales recovery of Taiwan IT industry is up in the air based on the financial reports released in July. The Nikkei calculated the July revenue of 19 key IT companies in Taiwan and discovered 3.2% year on year decreases in their total revenue compared to 2015, which indicated that annual growth rate is declining for 9 consecutive months.

Nikkei’s articles pointed out that total revenue of these 19 IT companies in July was NTD 791.7 Billion. July showed the first sharp decline after seeing 15% month to month decreases in total revenue of January 2016 becoming smaller per month subsequently. The comprehensive revenue decline is 1.5 percent steeper than June. Month to month revenues decreased in 14 companies while only 3 other companies are maintaining growths. In these companies, vendors of greater orders percentages with Apple are in obvious struggle. 8 out 9 companies whose key account is Apple showed decline in their sales.

The biggest electronical product OEM in the world, Hon Hai Precision Industry Co., Ltd., showed 6.1% decrease YOY compared to 2015, and decreases in all three of gross profit margin, operating profit margin and net profit margin. As for TPK, the touch screen vendors, its sales revenue decreased by 20.1% compared to 2015. The CEO of TPK, Zhong Yi-hua stressed that the company is making profit from channels other than its biggest customer, implying that Apple is enforcing price reduction on its suppliers due to declining sales.

On the other hand, LCD related sector is bottoming out. AUO, who fights bitterly in the price competitions with Chinese companies, showed 2% year on year decrease in its revenue, breaking the 15 months record of double digits decreases.

In terms of IC designs, the demand of chips for low to medium priced smartphones are constantly increasing in China and other emerging countries; the year on year growth of MediaTek increased by 38.5% while the revenue of biggest foundry in the world, TSMC decreased by 5.6%, showing the first decline after 3 months. Many people agreed that TSMC received more than adequate orders and is on its way back to existing development mode.