UPDATE 1-Taiwan Dec export orders jump on solid electronics demand

Monday, 20 Jan 2014 | 4:11 AM ET

* Dec export orders +7.4 pct y/y; poll saw 2 pct

* Export orders for 2013 set a record

* Ministry sees 'steady' electronics orders growth

TAIPEI, Jan 20 (Reuters) - Taiwan's export orders rose much faster than expected in December, which authorities said stemmed from record demand for communications and electronics products.

In December, orders increased 7.4 percent from a year earlier, the Ministry of Economic Affairs reported on Monday. The increase was the sixth in a row, and far exceeded the 1.99 percent gain seen in a Reuters poll as well as November's 0.8 percent rise.

With the solid December, export orders totaled a record $442.93 billion, 0.4 percent higher than in 2012.

Asia's export-reliant economies are pencilling in improved global demand this year as the U.S. builds up momentum and Europe slowly emerges from recession, but hopes for stronger external demand have been dashed in past years, weighing on industrial production and profit margins.

In Taiwan, export orders typically lead actual export figures by one to two months.

Recently, Taiwan's exports have been tepid. For December, they were 1.9 percent lower than a year earlier. 1/2ID:nT8N0K400A 3/8

The discrepancy could be due to the fact that data for exports orders include those from Taiwanese-owned facilities in mainland China, while exports only include those from Taiwan itself. Less than 50 percent of orders are filled by facilities in Taiwan, according to the ministry.

The ministry said December orders were at a record level, thanks to launches of new tablets and smartphones. It said orders for communication and information products jumped 13.5 percent from a year earlier, while electronics saw a nearly 15 percent rise.

Orders in the first quarter of 2014 will be lower than in last year's fourth quarter, but the outlook is still bright, the ministry said.

The rollout of new mobile devices for both the high-end and low-end "will support the steady growth of orders to our supply chain," it said.


Frances Cheung, a Hong Kong-based senior strategist of Credit Agricole CIB, expressed caution about the fresh, robust data as monthly order figures "have been volatile. I wouldn't read too much into December."

Still, she was optimistic about the prospects. "There's solid recovery in IT and chip sectors so Taiwan should see a good year ahead and electronics orders may post another record high."

Orders from China, Taiwan's largest trading partner, rose 6.9 percent, while those from the U.S. saw a 6.5 percent gain.

Orders from Japan rose 9.3 percent, while those from Europe jumped 11 percent.

Taiwan's export orders have performed better at a time other emerging markets have seen softening ones, HSBC said in a research report last week.

"The hope has long been that stronger capex spending in the West, especially the U.S., would put fire under IT spending and spur the lagging PC and laptop business as opposed to tables and smartphones, which are largely purchased by consumers," wrote HSBC economist Frederic Neumann.

Taiwan's exports are generally a good sign of demand for technology goods overseas, as a large share of Taiwan's economy is engaged in electronics manufacturing.

Some of Taiwan's leading tech firms, including globally-recognized brands HTC Corp and Acer Inc , are showing signs of stagnation amid changing consumer tastes worldwide.

Taiwan's electronics manufacturers, including Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's largest contract chip maker, and Hon Hai Precision Industry Co , the world's largest contract assembler, are doing somewhat better, with Hon Hai reporting a 18.9 percent increase in December sales from a year earlier and TSMC reporting fourth-quarter profit that beat forecasts.

(Reporting by Miaojung Lin, Michael Gold and Clare Jim; Editing by Richard Borsuk)