UPDATE 1-Taiwan export orders rise at record pace, U.S. a worry

* Export order growth picks up to record 72 pct

* Sustainability of demand question; U.S., China the keys

* Government sees slowdown in February

(Recasts, adds comment)

TAIPEI, Feb 25 (BestGrowthStock) – Orders for Taiwan’s exports
surged at a record pace in January, led by strong demand from
China for the island’s hi-tech products, but the growth rate
looks set to slow amid worries that a global recovery may be
weaker than expected.

Export orders to Taiwan, a bellwether for Asia’s technology
makers and an indicator of global demand, surged 71.8 percent
in January from a year earlier, the Economics Ministry said on
Thursday, buoyed by demand for IT products and components and
by the Lunar New Year shopping season.

That was below a median forecast in a Reuters poll of a
rise of 80.45 percent but the highest monthly gain on record,
surpassing the previous record annual gain of 52.63 percent
gain in December.

But the outlook is cloudy for export orders, with signs of
weakening consumer confidence in the United States and Europe
that point to lower demand for the flat-screen televisions and
computers that dominate Taiwan’s exports.

“I can tell that orders actually fell 4.3 percent month on
month. That would mean orders following the end of the
Christmas season have slowed in the U.S. and Europe,” said Tony
Phoo, economist at Standard Chartered Bank in Taipei.

“It will all come down to China, and unless China can pick
up the slack left by the U.S. and Europe, then these two months
(December-January) are the peak. It shows that the recovery is
still taking hold but the pace of recovery has slowed.”

Data this week showed U.S. consumer confidence in February
unxpectedly slumped to a 10-month low while house prices fell,
heightened concerns about the health of the world’s largest
economy. Germany also reported a surprise decline in business
sentiment, hinting Europe’s largest economy could slide back
into contraction in the first quarter.

Asian economies apart from Japan have bounced back strongly
from the global crisis as strong Chinese demand cushioned the
impact of persistently weak consumption in the United States
and Europe. But a solid rebound in U.S. consumption is needed
in the long run to ensure a sustainable global recovery.

Taiwan’s Au Optronics (2409.TW: ), the world’s No.3 maker of
flat panels, said it had enjoyed good sales of larger screen
LCD TVs in China during the Lunar New Year, which fell in
mid-February this year and in January last year.

“All in all, the LCD panel industry is on a healthy track,”
AU Chief Executive L.J. Chen told reporters at a media
gathering on Thursday.

Demand has been so strong that the AU predicted in January
that its factories would be working at more than 90 percent of
capacity in the first three months of 2010.

South Korea’s LG Display (034220.KS: ) said on Wednesday it
was considering building another production line to meet robust

Other global tech heavyweights such as Intel Corp (INTC.O: ),
Advanced Micro Devices Inc (AMD.N: ), Nvidia Corp (NVDA.O: ), LSI
Corp (LSI.N: ), Micron Technology Inc (MU.O: ) and Samsung
Electronics (005930.KS: ) are also seeing resurgent demand.

But Taiwan’s Economics Ministry said it expects export
orders to fall month-on-month in February, reflecting softer
demand over the long Lunar New Year holiday itself and another
growing issue for many tech firms: a shortage of labour in
their main factory bases in China.

Earlier this week Quanta Computer (2382.TW: ), the world’s
largest contract laptop maker, said it would raise salaries of
production workers in China by about 10 percent to fend off a
labour shortage.

“There’s still no change in the broader recovery story,
although the figures are a little weaker than expected,” said
Ma Tieying, economist at DBS Group in Singapore.

“We’re now seeing figures beginning to return to pre-crisis
levels, and with many governments pulling back on their
stimulus packages, we can expect these economic indicators to
show weaker growth in the coming months.”

A full table can be found at http://www.moea.gov.tw/

For a graphic of export orders, see:

Stock Research

(Reporting by Roger Tung, writing by Jonathan Standing;
Editing by Kim Coghill)

UPDATE 1-Taiwan export orders rise at record pace, U.S. a worry