(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
| Malaysia's Chip Exports Decline for Second Year
November 10, 1998 (KUALA LUMPUR) -- Malaysia's exports of semiconductors
in the first seven months of 1998 declined by 4 percent, the Finance
Ministry's annual economic report said.
|Exports of semiconductors declined to US$8.07 billion from about US$8.4
billion in the same period in 1997. This is the second year exports
were down, signaling the heady days of double-digit export growth rates
Exports contracted by 0.8 percent over the same period last year, a significant
fall from rises of 24.9 percent in 1996, 25.6 percent in 1995 and 29
percent in 1994.
The report suggested the drop in exports was mainly because of the deepening
regional financial crisis, which stifled demand from East Asian countries
and dried up sales of computers in the region.
Combined exports to Singapore, Japan, Taiwan and Hong Kong dipped a significant
24 percent to US$3.33 billion. However, there was a 17 percent rise
in combined exports to the United States, Germany, the United Kingdom
and the Netherlands amounting to about US$3.68 billion.
The United States, in particular, bounced back by 27 percent to US$2.56
billion, a marked rise from the negative growth rate of 17.6 percent
The United States is Malaysia's largest chip export market, with 31.7
percent share of total exports in 1998. The report stated the higher
exports may be attributed to the 38 percent depreciation of the ringgit
against the U.S. dollar since 1997.
Malaysia's exports are largely traded in U.S. dollars. U.S. manufacturers
such as Intel Corp., AMD Inc., Motorola Inc., Texas Instruments Inc.,
National Semiconductor Corp. and Harris Corp. have long-established
operations in the country, making it among the largest producers of
semiconductors in the world.
Manufacturing output for semiconductors and other components declined
by 0.4 percent in the first seven months of 1998 compared to a 23.7
percent rise in 1997.
"The slowdown in production was related to global excess capacity, especially
for dynamic random access memory (DRAM) chips, which were plagued by
declining prices, and a lack of new product applications," the report
Monthly surveys conducted by the Department of Statistics also said production
of integrated circuits fell by 2 percent from 6.94 billion units for
January to July 1997 to 6.8 billion units in the same period in 1998.
This compares to a 26.4 percent rise in integrated circuit output in
The semiconductor industry is a key indicator of the country's economic
well being, as it accounts for 24 percent of total manufactured exports
The economy is projected to contract by 4.8 percent this year, a 12.5-percentage
point plunge from the 7.7 percent growth rate in 1997, sinking the country
into its first recession in 13 years.
Malaysia's envied growth rates of 8 percent annually for the past decade,
mainly driven by manufactured exports, has ended as the ongoing Asian
financial crisis enters its second year.
The economic report suggests that external demand for Malaysia's goods
and services will remain weak in 1999.
"With the unsettling international financial environment and prospective
sluggish growth of major trading partners, the Malaysian economy is
expected to recover only mildly in 1999," it stated. The economy is
projected to grow a modest 1 percent next year.
(Julian Matthews, Asia BizTech Correspondent)
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