Taiwan's Supply Chains May Be Hurt by Japan's Devastating Quake

Heavily relying on imports from Japan, Taiwan may witness supply chains in some domestic industries hurt by the recent 9.0-magnitude quake in northeastern part of that nation, according to officials of Taiwan's Ministry of Finance.

In fact, Japan has been Taiwan's biggest import source for years. Statistics compiled by the Ministry of Finance showed that 20.7% of Taiwan's total imports were from Japan, reaching US$51.9 billion in 2010, compared to US$25.37 billion from the U.S., US$37.58 billion from China and Hong Kong and US$26.01 billion.

Imports of varieties of machinery and related parts from Japan, valued at US$10.6 billion, made up the largest portion of Taiwan's total imports from Japan in 2010, primarily because Taiwan still demands overseas semiconductor manufacturing facilities and key parts for machine tools to sustain development of related industries.

In the meantime, US$8.9 billion of Japan-made electronic parts and products were imported into Taiwan, with wafers and IC chips contributing US$6.4 billion to the total, LED (lighting emitting diodes) US$1.02 billion and cathode fluorescent lamps US$1.02 billion. Chemical products were Taiwan's third-largest import category from Japan, worth US$8.6 billion, with xylene the most needed.

Ministry of Finance officials noted that whether Japan's massive earthquake will impact badly Taiwan's exports and imports this year will hinge on several factors, such as how long Japan's electricity rationing will last, when the nuclear radiation crisis will be solved and how much inventory of materials are held by Taiwanese firms to cushion the impacts of upcoming supply squeeze due to Japanese suppliers suspending production. In other words, impacts of Japan's earthquake on Taiwan remain to be seen, they added.

source & copyright: CENS