Monday, January 17, 2022

Taiwan’s Central Bank governor believes the chip crisis to improve by the second half of 2022

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The chip crunch, which was caused by an imbalance in supply and demand due to a severe epidemic in the first half of 2020 and a stronger-than-expected economic recovery in the second half, is expected to improve significantly in the second half of 2022, according to Taiwan’s Central Bank governor Yang Chin-long.

Emerging technology applications, such as 5G communications, high-performance computing, and automotive electronics, have boosted demand, according to the central bank. The demand for digital transformation business opportunities is high, and high-end semiconductor production capacity is coming online, while manufacturers in Taiwan are increasing their production capacity allocation.

Yang stated in his briefing that the International Monetary Fund (IMF) expects the world economy to grow at a high pace of 4.9 percent in 2022 and that Taiwan’s export momentum will continue, resulting in strong investment in sophisticated semiconductor equipment. Furthermore, the growth of the technology budget, as well as sustained investment in Taiwan by big multinational manufacturers, are expected to boost local investment. This year’s and next year’s economic growth rates are expected to be 6.03 percent and 4.03 percent, respectively.

The Executive Yuan announced that tax-deductible credits for investments in smart machinery and 5G systems will be extended until the end of 2024, referring to the expansion of the technology budget. The tax credit program also includes investments in cybersecurity technology.

Taiwan’s technological development budget for 2022 is NT$106.3 billion, up 15% from the previous year. Investment incentives in Taiwan were set to expire at the end of this year, but the Central Bank announced that the Executive Yuan intended to prolong them for another three years, with an energy-saving carbon reduction program as a condition.

According to SEMI’s September report, there will be 38 new fab projects under construction worldwide in 2021 and 2022, according to the Central Bank. However, it stated that capacity expansion or mass production of new fabs would take 1-2 years and that some of the new capacity would begin in the second half of 2022.

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Furthermore, the global economy has improved, major countries have promoted infrastructure development, and the peak procurement season in Europe and the United States is driving export growth. Emerging technology applications and digital transformation are in high demand, while exports of information, communication, and audio-visual products, as well as electronic components and communication products, continue to grow. The fourth-quarter real export growth rate is expected to be 10.52 percent, with 16.8 percent for the entire year of 2021.

Supply chain bottlenecks are predicted to diminish in the first quarter of 2022, according to the International Monetary Fund (IMF) and the European Central Bank (ECB), with transportation, delivery delays, and semiconductor shortages expected to improve in the second half of 2022.

Even though the US Federal Reserve announced an accelerated reduction in bond purchases due to rising inflation and is expected to raise interest rates three times in 2022, Yang believes that Taiwan prices are relatively stable compared to the US and that inflation is a short-term phenomenon that will slow down next year.

Also Read: SK Hynix is gearing up for the development of the industry-first 48GB and 96GB DDR5 memory chips targeting servers


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Avatar of Nivedita Bangari
Nivedita Bangari
I am a software engineer by profession and technology is my love, learning and playing with new technologies is my passion.


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