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A motorcyclist rides past the logo of Foxconn, the trading name of Hon Hai Precision Industry, in Taipei, Taiwan. Image Credit: Reuters

Taipei: Taiwan’s export orders fell at a slower price than expected in April, but the government says May will bring a seventh straight month of contraction as slowing global tech demand continued to hurt the island’s trade-reliant economy.

Orders in April dropped 3.7 per cent from a year earlier to $37.66 billion (Dh138.32 billion), Ministry of Economic Affairs data showed on Monday.

A Reuters poll had forecast a 5.9 per cent fall, and March orders had dropped 9 per cent from a year earlier.

Taiwan’s hi-tech factories are major suppliers for global tech heavyweights such as Apple Inc and Qualcomm, and the continued weakness in orders suggests global electronic demand will remain soft for some time.

Carl Liu, an analyst at KGI Securities, noted that April orders did not include the latest escalation of the US-China trade war, “which has added risk to future export orders and will decrease and delay any recovery to export orders in the second half of the year”.

The new tariffs “will mean very limited growth momentum,” he said.

The ministry attributed the April shrinkage to slowing global growth and demand for end-products as the US-China trade dispute continues.

It said that should the US impose 25 per cent tariffs on an additional $325 billion of Chinese goods, the impact on Taiwan would be “significant”, especially on smartphones and computers.

“Global trade tensions are intensifying, and it is likely to affect the growth momentum of orders,” the ministry said in a statement. Optical equipment, in particular, decreased by 8.9 per cent, due to weak demand for panels and new capacity in mainland China.

The ministry said it expects May export orders to decline 7.6-10 per cent.

Better times coming?

But it said 2019’s second half, which includes launches of smartphone models and rising demand for new technologies including 5G, cloud computing and artificial intelligence could support a rebound of electronics orders.

“The continued expansion of emerging applications will help bring new business opportunities,” the statement added.

The prolonged downturn in global tech demand has hit profits for Taiwan’s many technology manufacturers this year.

TSMC, the world’s biggest contract chipmaker, posted a 32 per cent drop in March quarter net profit from a year earlier, citing slowing mobile sales.

Foxconn, the world’s largest contract manufacturer, reported a bigger fall in quarterly profit than analysts had expected, amid waning demand for electronics from its key customers.

In April, weak export demand was seen from Taiwan’s major markets. Orders from the United States fell 6 per cent year-on-year, on top of March’s 9.7 per cent decline. Those from China dropped 9.9 per cent from a year earlier. But those to Japan and Europe increased from a year earlier.