Machine tool firms eye export growth

‘PIVOTAL SHIFT’: High import tariffs had left Taiwanese companies struggling to compete with major rivals in the US, but the industry expects rapid growth this year Taiwanese machine tool makers aim to grow exports by 5 to 10 percent this year, bolstered by strong demand for high-value-added equipment used in the semiconductor, aerospace and defense sectors, as well as a lower US tariff, the Taiwan Machine Tool and Accessory Builders’ Association (TMBA) said yesterday.The US market would be one of the major growth drivers, as lower tariffs would help reduce local makers’ costs and enhance their competitiveness against Japanese and South Korean peers, TMBA chairman Patrick Chen (陳紳騰) told a news conference in Taipei.Taiwan last week announced that the US would slash tariffs on Taiwanese goods to 15 percent from the 20 percent set in August last year, on par with Japan, South Korea and the EU, and without any stacking of duties.The reduction in US tariffs would allow local companies a greater price negotiating leeway of 8.5 to 13 percent, Chen said.Taiwan’s exports to the US are expected to rise 5 to 8 percent this year, taking advantage of robust demand for machine tools used in artificial intelligence (AI) data centers, semiconductor equipment, and the defense and aerospace segments, he said. The US was the second-largest export market for local machine tool and accessory companies, accounting for about 16 percent of total exports last year, behind China.“This year represents a pivotal shift in the machine tool industry’s trajectory,” Chen said. “High import tariffs left Taiwanese manufacturers struggling to compete against major rivals in the US market. The new trade pact would help unleash manufacturers’ innovation and transformation power. We expect the machine tool and accessory industry to usher in a period of rapid growth this year.”As the semiconductor, electric vehicle, aerospace and defense industries are swinging back to an upcycle, demand for high-precision equipment is surging, he said.About 60 percent of manufacturers surveyed by the association expressed strong confidence about revenue growth this year, he said.Last year, Taiwan’s machine tool exports fell 9.6 percent year-on-year to US$2 billion and shipments of machine tool components fell 0.3 percent to US$1.506 billion, as demand dipped almost across all markets, hitting the weakest level since the global financial crisis in 2019, association data showed.Vietnam, Thailand and Malaysia registered growth last year.Metal-cutting machine tool exports fell 10 percent to US$1.65 billion, machine centers slumped 8.3 percent to US$603.48 million, lathes dropped 18.3 percent to US$435.77 million and metal-forming machinery slid 7.8 percent to US$353.35 million, the data showed.The association attributed the export decline to unfavorable foreign exchange rates, given that from 2021 to Jan. 9, the yen and won had depreciated 53.2 percent and 42 percent against the greenback respectively, larger than the New Taiwan dollar’s 11.2 percent fall over the same period.The association has high hopes for the Taiwan International Machine Tool Show at Taichung International Convention and Exhibition Center from March 25 to 28, as the event is expected to help domestic manufacturers secure orders and bolster their presence in the global market, it added.