Taiwan’s exports of machine tools are estimated to hit record high of US$4.2 billion by revenue this year after the Taiwan industry’s revenue for the first half rose 9.40% year on year, to US$2.09 billion, regardless lukewarm demand in major economies, forecasted Taiwan Association of Machinery Industry (TAMI) Sectary General J.C. Wang, adding that in June this year Taiwan’s machine-tool exports totaled US$356 million, for better-than-expected 8.4% increase YoY.

Vice president of Victor Taichung Machinery Co., Ltd., W.Z. Hsu, said that the company’s shipments to the U.S. and Southeast Asia had increased despite demand in China, the world’s No.2 economy and Taiwan’s biggest export destination of machine tools, have apparently slipped due to economic slowdown, which is due to surging labor cost that is driving manufacturers to migrate to Southeast Asia.

TAMI’s Wang pointed out that Taiwan’s machine-tool exports have dropped mainly in developing markets as China, Brazil and India, to which he attributes lukewarm exports of these markets to have dampened investments in capital equipment, though Taiwan’s exports to Europe and the United States have steadily increased.

Wang said slumping Taiwan exports to China is also due to mainland’s manufacturers of car parts and aircraft parts typically buy high-end machine tools from Germany and Japan, driven by Chinese government’s zero-tariff policy to spur upgrading China’s industries. Also China-made machines tools have gained increased market share to encroach on Taiwan’s market share.

He warned that South Korean equipment suppliers will emerge as Taiwan’s primary competitor in India due to ongoing trade talks that will offer South Korean machine tool manufacturers zero or preferential duties on exports to India.