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Taiwan August export orders slower, but smartphone sales raise hopes

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[September 22, 2014]  By J.R. Wu and Emily Chan

TAIPEI (Reuters) - Taiwan's export order growth was below forecast in August, but prospects in coming months will be helped by solid demand for tech goods, especially as Apple's newest iPhone hits the market.

Some delays have affected orders but they are starting to build up for the iPhone 6 and 6 Plus since Apple Inc's <AAPL.O> launch earlier this month, Lin Li-jen, an official with the Ministry of Economic Affairs, told a news conference. "We have not seen orders for such international brands in August export orders because there have been delay issues."

Lin, who is the director general of the statistics department at the ministry, did not elaborate on the delay but said she expects smartphone-related orders to become more apparent after September.

Taiwan's export orders last month reached $38.21 billion, mostly flat compared to the value in July. But the year-on-year growth rate at 5.2 percent came in below a Reuters poll of economists who forecast a median 7.4 percent growth.

Among the categories, orders for electronic products in August grew 12.6 percent from a year earlier, while those for machinery rose a stronger 17.4 percent.

Taiwan's export orders are seen as a leading gauge of demand for Asia's exports and high tech devices. The island's tech manufacturers design and churn out many of the parts and products found in smartphones, gameboxes and personal computers.

The latest iPhone is packed with parts made by Taiwanese tech component makers and assembled by major contractors including Hon Hai Precision Industry Co Ltd.

Orders typically lead actual exports by two to three months, but sometimes quick turnaround times in the production of consumer electronics lead to the data being less predictable. Also, many Taiwanese factories are located in mainland China from which final exports are shipped.

Lin said that the ministry expects Taiwan's export orders for the year to reach a record high of $450 billion. For the first eight months of this year orders stood at $296.85 billion.

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"The external outlook for Taiwan is still positive," said Raymond Yeung, a senior economist at ANZ in Hong Kong.

Taiwan was outperforming South Korea's tech exports this year, underpinned by the current iPhone 6 cycle, said Tim Condon, an economist with ING Singapore. "It is a hero-product cycle and when this cycle is over we'll be back to low-single-digit growth," Condon added, referring to the iPhone 6.

On a month-on-month basis, the August revenue for Taiwan Semiconductor Manufacturing Co rose for the second straight month in August, while posting a strong 26 percent on-year growth rate.

Credit Suisse said in a research report earlier this month that it was optimistic about the momentum of Taiwan's tech exports and production in the second half due to new smartphone model launches.

(Additional reporting by Michael Gold; Editing by Jacqueline Wong)

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