Since 2020, Taiwan’s exports have hit multiple new highs, attracting a huge investment inflow. Taiwan has a huge electronics industry, and with the electronics industry being the biggest contributor of GDP growth, Taiwanese economy has benefitted from booming demand for electronics around the world. As a result, Taiwanese stock index TAIEX kept reaching new highs. Electronics exports absolute value becomes a great indicator for TAIEX. It tells us whether the stock market is supported by fundamentals and when the stock index could reverse.
The total value of exports account for 65% of GDP. Electronics are prominently 40% of exports. Electronics exports YoY and its absolute value are highly correlated with TAIEX’s peak and troughs. 85% of electronics exports are semiconductors, 80% of which are wafer foundries, 10% DRAM (dynamic random-access memory).
Electronics were down last Winter due to the pandemic but later rose to NT$12.7 billion in December 2020. If absolute value maintains at current level by June 2021, that’s a guarantee for double-digit YoY growth, which provides more momentum for TAIEX.
TSM (or TSMC)— the biggest semiconductor foundry company in the world, whose ADR stock price also climbed to new highs last year, expects to score record revenue in Q1 2021. According to TSMC’s earnings call, worldwide semiconductor industry excluding memory is expected to grow 8% for 2021; worldwide wafer foundry to grow 10% YoY.