Emerging applications remain major boosters for Taiwan chemical industry

By Sharvari Rale

A look back at Taiwan’s chemical industry reflects enormous growth over the decades. The industry is successfully foraying in diverse application areas, which will continue to boost the industry over the next few years. Experts forecast steady growth prospects for Taiwan Chemical industry.

One of the oldest knowledge-based verticals, chemical industry has always been considered to underpin better living environment for humans. In fact, it is the source of raw or processing materials for almost every other manufacturing industry. Chemical material upgrades have been the fundamental strategy for several industry developments over the past few decades.

Fundamental challenges persist

The origin of the chemical industry in Taiwan can be traced long back to the 19th century but it gained the real impetus post-World War II when China pioneered the wave of rapid industrialisation. The growth and expanse of the chemical industry have played a pivotal role in boosting the economy of Taiwan through decades. The chemical industry in Taiwan is currently growing at a steady pace but rosy expectations in terms of profits and growth may have to face some ground reality. The current scenario portrays Taiwan as a self-sufficient country housing a slew of industrial verticals, including chemical but the challenges regarding international trade regulations and those imposed by technical initiatives by a government still stand as major roadblocks. Other emerging markets, including China, are also creating a highly competitive development landscape. Although numerous factors are shaping the chemical industry in Taiwan, a dramatic growth pattern will less likely be seen.

Rampant emergence of end-use applications fuel market growth

It was in the early 1960s when Taiwan got actively involved in synthetic fibre production; however, textile and garment is one of the first sectors wherein the chemical industry in Taiwan originated.  After Japan took over, Taiwan had a few important small-scale chemical-based plants in its backup; synthetic fibre, dyeing, papermaking, grease processing, and brewing to name a few that served the country to get through the adversity.

Later, Taiwan chemical industry welcomed a sweeping range of segments, including petrochemical, fermentation and brewing ie. ethanol production, oil refining, acid and alkali production for agricultural fertilizers, pesticides production, bakelite production, leather processing, plastics, PVC and ABS (acrylonitrile butadiene styrene), semiconductors and motherboards, electronic chemicals, fine chemicals and precision machinery, advanced and specialty chemicals, consumer electronics, and FPD and LED technology.

Today, Taiwan’s chemical industry is highly diverse that traverses almost everything, from traditional textile to utterly modern nanotechnology material and others. The overall market has witnessed immense technological advancements, which is identified to be responsible for a surging demand for advanced chemicals and materials. Moreover, speciality chemicals and fine chemicals have also been observing high demand from consumer electronics and biotechnology sectors. Furthermore, since LCD and TFT manufacturers claim that chemical materials capture more than half of the entire production costs, forecasting strong growth opportunities for speciality chemicals segment in near future cannot be overstated.

In the early 21st century, China and the Middle East were tough competitors for Taiwan in terms of chemical production. Emerging environmental concerns aggravated the competition a step further. This resulted in Taiwan’s augmented production of the key chemical materials, such as epoxy resin and polybutylene terephthalate. The production eventually extended to the manufacturing of electronic-grade chemicals, on the backdrop of the flourishing consumer electronics sector. Today, over 75 percent of the total chemical output of the country is of basic industrial chemicals. While pharmaceuticals account for a less than 5 percent share, speciality and fine chemicals contribute to a sizeable share of roughly 20 percent. Taiwan chemical industry currently supports thousands of end-use applications chiefly relying on electronic-grade chemicals; silicon wafers, LCD, TFT, FPD, nanotechnology, pharmaceuticals and biotechnology chemicals, solar energy panels, engineering plastics, and high-performance synthetic materials are only the tip of the iceberg.

Strong supply chain strengthens market further

When it comes to chemical production capacity expansion and elevated sales revenues, top players in Taiwan’s chemical industry demonstrate strong establishment, globalised presence, and firm trading bases in developed as well as developing countries, such as China, Southeast Asia, and the US. With a solid supply chain that performs end-to-end operations with tremendous efficiency, the chemical industry in Taiwan marks an irreplaceable position within the Asian and global chemical markets.

Chinese Petroleum Corp. (CPC) and Formosa Petrochemical Corp. are the major companies supplying the basic upstream feedstock that includes propylene, ethylene, and butadiene. There are several companies, which produce the key mid-stream monomers or polymers, intermediates, and products, such as polypropylene and PVC. Synthetic fibre industry registers substantial consumption of mid-stream resources, such as ethylene glycol, terephthalic acid, and acrylonitrile. As far as downstream petrochemicals are concerned, the country continues to export over 50 percent of the produced petrochemical products to China, the maximum of which include plastics, followed by raw materials for synthetic rubber, and synthetic resins.

Key players in Taiwan chemical industry

Taiwan records to be the largest ABS producer, the second largest PTAs supplier, and the fourth largest in PVCs supplier across the globe. Asia’s top 10 manufacturing companies (recently featured by Forbes) include two of the Taiwanese firms, Formosa Chemicals & Fibre Corp. and Formosa Plastics Corp.

• Far Eastern New Century and Nan Ya Plastics specialise in diversified chemicals, whereas Formosa Chemicals is among the top in specialised chemicals.
•  The largest fine chemicals supplier in Taiwan, GO YEN CHEMICAL INDUSTRIAL CO LTD (GYC Group), houses an exceptional R&D team and holds a strong global presence through frequent technology exchanges with German, Swiss, and Japanese players.
• With booming markets in IT, the material and fine chemical industry in Taiwan is focusing more on nanotechnology materials, printed circuit boards, plane display materials, and semiconductors. The key market players in materials include Chi-Mei, Nan Ya Plastics and Formosa Plastics, while the fine chemicals segment is operated by UPC, Dahin, and Lee Chang Yung Chemical.
• Among the most prominent companies, Formosa Plastics Corporation, Nan Ya Plastics Corporation, Eternal Chemical Corporation, and Grand Pacific Petrochemical Corporation have expressed a strong foothold in the U.S. market.

Exploring opportunities aid manufacturers

Apart from pharmaceuticals and biotech, agriculture and agro-tourism, green energy, medical care, and cultural business segments save lucrative opportunities for chemical manufacturers in Taiwan. Production technology upgrades, consolidation of sales and production processes, and development of specialised or customised materials for niche applications, such as medical devices, functional fibres, modern communication, optoelectronics, biofuels, and green plastics and textile will help them discover a new world of success.

Author: Sharvari Rale is Content Developer at Future Market Insights

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