TAIPEI – Taiwanese exports of electronic products, primarily semiconductors, shrank in July to $17.7 billion, a 0.4% year-on-year drop, due to faltering demand for foundry services, chip testing and packaging services and printed circuit boards.

Demand for memory chips and networking chips helped absorb some declines, the nation's Ministry of Economic Affairs said.

New orders for electronics and for information and communications technology (ICT) products last month beat the expectations of the ministry, Department of Statistics Director Huang Yu-ling told the Taipei Times.

Robust demand for artificial intelligence (AI)-enabled servers also helped buoy the weakness in outbound demand for Taiwanese goods, Huang said.

With the electronics industry entering its peak season, the ministry expects export orders in August to drop 1.5% month-on-month to $47 billion, or to grow 2.7% sequentially to $49 billion. That represents an annual decline of 10.2% to 13.9%.

"For the third quarter, we expect the decline in export orders to be milder, helped by seasonal upticks and the introduction of new consumer electronics," Huang said. "We also believe there is a chance to see export orders swing back to growth in the fourth quarter, thanks to the AI boom, improved supply chain inventory and a lower base."

Overall, the ministry remains cautious about the lingering impact of high inflation and the central banks’ tight monetary policy on consumer spending behaviors, as well as a disappointing economic recovery in China, Huang said.

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