Taiwan's machine tools moving toward high added value, stabilizing domestic demand for exports

2019-07-08

In 2017, the production value of Taiwan's manufacturing industry was NT$18.3 trillion, and its total export value accounted for 75% of the domestic GDP. In recent years, the industry has been actively strengthening manufacturing technology, investing in high-end manufacturing equipment, and training professional talents. The industry’s added value rate has reached 29.7%, making Taiwan the second largest country in manufacturing in Asia, second only to Japan.

According to the latest 2018 global machine tool industry survey by Gardner Business Media, Inc., Taiwan is ranked the world's ninth largest machine tool consumer, with a total machine tool consumption of approximately US$2.1 billion, a growth of 15% from 2017. In the domestic demand market, the machine tool equipment used for metal processing and manufacturing is mainly applied in the automobile component manufacturing industry, the electronic and electrical industry, the aviation and defense industry, and other industries (including petroleum and medical industries). More than 50% of these industries use equipment made in Taiwan, and the rest of the nearly 50% industries use imported equipment. The largest source of imports is Japan, with an average import value of 48.1% in the past five years. The top three machine tools imported to Taiwan are: special processing machines which use laser to process various materials (referred to as laser cutting machines), lathes and machining centers. The laser cutting machine is the major import item, with a 44% import share. Taiwan is ranked the fourth largest import country for laser cutting machines in the world, and its lathe imports are mainly vertical CNC lathes.

Taiwan's manufacturing production value has the highest proportion in computer, electronic, and optical products, which comprises about 35% of the total output, followed by the metal & mechanical industry, accounting for about 28% of the total output. Under the wave of migration and restructuring of the global manufacturing supply chain, Taiwan’s strong manufacturing foundation helps it become a very attractive new production base. Moreover, in 2018 the government offered many incentives to attract Taiwanese businessmen to return to and invest in Taiwan. The up-to-date planning of these manufacturing bases will also bring new business opportunities to the global machine tool industry.

In addition to changes in the market and trade environment, the employment population is reduced, and the development of science and technology has prompted industrial transformation and upgrading. These factors have pushed forward the demand for Turnkey Solution, which is a combination of software and hardware technologies such as smart machine tools, industrial robots, automatic guided vehicles, automatic warehousing, IoT, and artificial intelligence. For example, FATEK, a subsidiary of FEMCO (Far East Machinery), has developed fully automated production lines for a variety of aluminum rims for large trucks and small passenger cars, which are not only supplied to Taiwanese manufacturers, but also sold to well-known aluminum rim manufacturers from the US and China. Furthermore, in March 2019, Tongtai Machine & Tool Co. announced that it cooperated with SIEMENS AG and KYMCO (Kwang Yang Motor Co.) to complete a smart factory solution called "Motorcycle Components Smart Production Line". It provides a production line to manufacture six different components with a production mode of small quantity but diverse products, significantly shortening the delivery time from 3 days to 8 hours. 

Taiwan's machine tool industry is steadily founded. Combined with the transformation of smart manufacturing and the interconnection of upstream and downstream resources, the industry occupies an important position in the relevant global industrial chain. In addition, coupled with the return of Taiwanese businesses and the policy of equipment localization, the domestic demand market of the machine tool and component industries has become a focus of attention.


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