TAIPEI (Taiwan News) — A sharp rise in the Taiwan dollar is unfavorable to export-oriented industries, such as the domestic printed circuit board makers, which reports 70% of payments in US dollars.
As exchange rates fluctuate, printed circuit board or PCB makers have found it difficult to adjust foreign currency holdings. Exchange losses are expected to put pressure on second-quarter profits. Domestic PCB makers are now scaling back profit forecasts despite buoyant AI demand, per CNA.
According to a report by the Taiwan Printed Circuit Association and the Industrial Technology Research Institute, the output value of the domestic PCB industry chain experienced an annual growth rate of 8.1% in 2024. Now faced with a looming US-China trade war and currency appreciation, analysts believe the industry is unlikely to repeat such growth.
According to Unimicron, a major PCB substrate manufacturer, appreciation of the Taiwan dollar will negatively impact the company as the majority of payments are in US dollars. While some foreign exchange losses can be offset through “natural hedging” as raw material and equipment suppliers in Taiwan and Japan are paid in US dollars, the impact on profits will be significant.
Compeq, a leader in high-density PCB, said it is still evaluating the impact of the Taiwan dollar appreciation. The company pledged to give a detailed explanation at an upcoming earnings conference.
Another Taiwan PCB manufacturer admitted it held a position of US$300-400 million (NT$9.1-12.1 billion) on its books. As the exchange rate has fluctuated quickly, the company was unable to respond promptly to limit foreign exchange losses.
A senior executive within the PCB industry referred to TSMC's belief that every 1% depreciation of the US dollar against the Taiwan dollar will cause the company’s operating profit margin to fall by 0.4%. He said the impact on PCB makers and other SMEs will be even greater.
As PCB makers and other electronic component manufacturers are mainly engaged in exports, they typically hold large amounts of US dollar assets. Quarterly financial reports also report gains or losses associated with foreign currency exchange outside of business operations.
