Taiwan's machine-tool makers show guarded optimism about their 2015 outlook, with over NT$10 billion (US$333.3 million) of combined orders booked and yet jittery about several potentially risky factors.
According to the Taiwan Association of Machinery Industry (TAMI), the U.S. government's announcement to end quantitative easing (QE), recent reports of perhaps earlier than expected interest rate hike by the U.S. Fed, steep devaluation of the Japanese yen as part of Abenomics, and South Korean Doosan Group's underselling in the machine-tool market.
Ending QE in October has not pushed capital globally back to America as predicted to impact Asian economies, but Prime Minister Abe has devalued yen-to-greenback rate to 120-to-1 to drive Japanese exports to offset its deflation; while the TAMI does not expect the Taiwan government to allow the New- Taiwan-dollar-to-greenback rate to drop below 31-to-1 to counter the devalued yen's impact on Taiwan's export.
The Doosan Group has cut prices of all its machine tools to US$3,000-10,000, which could result in further underselling in China's machine-tool market due to the Free Trade Agreement (FTA) signed by S. Korea and China.
In the first nine months this year, Taiwan's exports of machine tools grew only 6.6% year on year, to US$2.8 billion mostly thanks to high similarity between Taiwanese and South Korean products, coupled with lower-end technologies in Taiwan-made machines relative to those in Japanese machines.
However, Taiwan's machine-tool makers have made the most of the Taiwan International Machine Tool Show 2014, staged Nov. 5-9 in Taichung, central Taiwan, where foreign buyers saw Taiwan-made machines with high price-to-performance ratios.
Some industry executives estimate the island's machine-tool industry to generate revenue of around US$4 billion by the end of this year, up 10% from last year. TAMI president, J.C. Wang, expects the Taiwan industry's 2014 exports to rise an annual 6-8%
