“Unless imports of Taiwanese semiconductor chips by the US and Europe increase, the year-on-year contraction should continue in the first half of 2023,” said Iris Pang, chief economist for Greater China with ING.

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Orders to Taiwan from mainland China and Hong Kong also fell by 33.8 per cent in March, year on year, while shipments from Taiwan ordered in Europe were down 33.8 per cent, the ministry data shows.

And orders from the US, Taiwan’s largest export market last month, fell by 20.7 per cent, the data indicates.

“The key factor of such a big fall in export orders comes from the fall in the export order amount to the US,” Pang said. “We expect that the US economy will continue to weaken. This is very bad news for Taiwan’s semiconductor industry.”

Taiwan’s global export orders had lost 19.3 per cent, year on year, in January and 18.3 per cent the following month. The March drop was the sharpest since January 2009, during the global financial crisis.

S&P Global expects the United States to enter a “shallow” recession this year and says the US gross domestic product (GDP) will lose 0.3 percentage points from a 2023 peak in the first quarter, toward a low point in the third. The euro zone GDP will expand by just 0.8 per cent this year, according to a European Commission forecast.

“This downward trend should continue into the third quarter, as demand in the European and American markets remains weak,” said Darson Chiu, a research fellow with the Taiwan Institute of Economic Research in Taipei. “In addition, the market recovery in mainland China is not as fast as expected.”

Demand for Taiwan’s tech hardware has slumped following the first two years of the pandemic, when people worldwide needed new PCs and mobile devices to work and study from home.

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Smartphone shipments dropped worldwide by 18.3 per cent, year on year, in the final three months of 2022 to 300.3 million units, market research firm IDC said in January. It also forecast that shipments would decline by 1.1 per cent this year to 1.18 billion units.

IDC blamed “significantly dampened consumer demand, inflation, and economic uncertainties” for the fall late last year.

PC shipments plummeted by 28 per cent in the first quarter of 2023 to 56.7 million units, according to market research firm Counterpoint.

Orders for Taiwan’s consumer electronics, the top export-order category with US$14.73 billion in March sales, fell by 29.4 per cent for the month, year on year. Orders for information and communication products dropped by 26.3 per cent to US$12.74 billion.

Outside the tech space, orders for basic metals fell 27.3 per cent, and commitments for Taiwan-made machinery declined 21.3 per cent, ministry data shows.

In another telltale sign of weak offshore demand, industrial output in Taiwan lost 8.68 per cent in February, year on year, spiralling downward for a sixth consecutive month. March data has yet to be released.

“This could turn around when mainland China’s economic recovery is more solid in the second half of 2023,” Pang said. “Demand for consumer electronics should rise, and therefore demand for semiconductor chips should also increase.”

Taiwan supplies around 60 per cent of the world’s semiconductors, including the most technologically advanced. Hi-tech goods make up about 30 per cent of Taiwan’s US$829 billion gross domestic product (GDP).

It is “likely” that Taiwan’s exports will be able to find “support” in the third quarter and rise in the final three months of 2023, said Hu Jin-li, a professor with the Institute of Business and Management at National Yang Ming Chiao Tung University in Taipei.