Taiwan’s trade continues to boom as surplus hits another record high
Taiwan's trade dynamics are exhibiting remarkable strength, highlighted by a record trade surplus of US$23.6 billion in September, driven primarily by a 60.9% year-on-year increase in exports, particularly in the tech sector. Per the full note from ING, this growth was largely fueled by robust demand for machinery and electrical equipment, indicating that Taiwan remains a critical player in the global supply chain, especially within semiconductor markets. Consensus forecasts appear to be aligning with an optimistic outlook for Taiwan's export values amid strong AI-driven demand. This data context could have significant implications for the New Taiwan Dollar's (TWD) performance against major currencies, especially given the resilient tech investment climate that underpins this growth.
What the desk is arguing
The desk frames Taiwan’s extraordinary trade surplus as a potential indicator of sustained economic strength and growing demand for tech exports. In September, exports surged significantly, outpacing market expectations sharply, thus laying a strong foundation for potential currency appreciation.
Specifically, Taiwan's export growth, bolstered by a staggering 69.4% increase in machinery and electrical equipment, signals sturdy demand in these sectors, which constitute over 85% of total exports. With the US market leading this charge at a remarkable 106.2% rise in YoY exports, the US's role as Taiwan’s primary trading partner continues to solidify.
Where it sits in our coverage
Currently, our consensus target for the TWD against the USD stands at 1.075, with a range between 1.04 and 1.12. Prominent firms include: - jpmorgan with a target of 1.10 for Mar26 - bofa with a more conservative target of 1.04 for Mar26.
The desk's projection sits near the upper boundary of the consensus range, suggesting a bullish sentiment around TWD's valuation given the recent export data.
How other firms see it
Firms such as jpmorgan and barclays appear aligned with the positive outlook for TWD in light of the export strength. Conversely, bofa holds a contrary position, anticipating softer performance for the currency due to potential external economic headwinds.
Traders should closely monitor the TWD/USD trajectory as it correlates with broader tech sector performance and global semiconductor supply chains.
What the calendar says
As there are no significant events scheduled in Taiwan's economic calendar for the next month, the focus remains on the ongoing trade performance and broader market developments that could influence investor sentiment.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Taiwan's trade surplus reached a record $23.6 billion in September, showing robust export growth.
- 02Exports surged 60.9% YoY, largely driven by machinery and electrical equipment.
- 03The US remains Taiwan's largest market, with exports rising 106.2% YoY.
- 04With no firm calendar events, traders should watch broader economic signals affecting the TWD.
Market implications
Watch for TWD appreciation against major currencies as strong export data continues to surface. The upcoming quarterly earnings reports from key tech firms may provide additional insights into continued demand for Taiwanese exports.
Risks to this view
A downturn in global tech demand or significant geopolitical tensions in the region could negatively impact Taiwan's export projections. Additionally, supply chain disruptions or changes in trade policies with China may pose risks to sustaining the current trade surplus.
Older quick take Quick take Published 10:12 Taiwan Taiwan’s trade continues to boom as surplus hits another record high Taiwan's trade surplus rose to US$23.6bn in September, once again marking a new all-time high, supported by a 60.9% YoY surge in exports. Talks of AI safety and calls for a slowdown haven't impacted demand for Taiwan's tech exports just yet Taiwan's export growth has been driven almost entirely by the broader machinery and electrical equipment category USD3.6bn Taiwan's September trade surplus Higher than expected Taiwan's export growth hits a six-month high Taiwan's exports surged by 60.9% year-on-year in September, up from 41.0% YoY in August, marking a six-month high. Exports comfortably beat expectations in September (market: 46.7%, ING: 46.7%).
Year-to-date, Taiwan's exports are now up 49.1% YoY. By product, Taiwan's export growth has been driven almost entirely by the broader machinery and electrical equipment category, which grew 69.4% YoY and represented a whopping 85.6% of Taiwan's total exports in September. Within this broader category, semiconductor exports rose a relatively tame 46.1% YoY in September, while DRAM exports surged by 286.3% YoY amid the price surge.
Information, communication and audio-video products grew by 103.0% YoY overall. Other than the tech sector, mineral product exports (86.4%) and chemical exports (27.2%) also performed well. By export destination, exports to the US rose 106.2% YoY, while exports to Mainland China and Hong Kong rose 30.2% YoY, widening the gap and cementing the US's position as Taiwan’s top export market.
Other export destinations seeing exceptional growth in September included Thailand (362.0%), Australia (266.4%), and Ireland (172.2%). Exports to ASEAN also remained strong, growing 93.4% YoY. Taiwan continues to be one of the main beneficiaries of higher tech prices globally, with export prices rising 25.8% YoY in September.
Export growth has surged as AI-driven demand stays resilient Imports also beat forecasts but trade surplus still hits a new record high Taiwan's imports rose 51.7% YoY in September, up from 44.3% YoY in August and surpassing expectations (market: 44.2%, ING: 44.3%), though less so than exports. Year-to-date, Taiwan's imports are now up 43.8% YoY. Similarly to exports, imports have also been heavily concentrated in the machinery and electrical equipment category, which represented 68.6% of total imports in September.
This category saw 73.8% YoY growth in imports, with electronic parts (82.5%) and information, communication, and audio-video products (106.5%) seeing the strongest growth within the category. However, there is more to the import story than tech alone. We also saw gold imports pick up 60.4% YoY, while petroleum imports rose 33.1% YoY.
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