IT industry to recover in Q2: Barclays Capital

In its latest report, Barclays said the U.S. Institute of Supply Management's new orders index rose to 57.6 in December, the highest since August and suggestive of an increase in manufacturing activities. At the same time, the 1GB DDR DRAM chip has jumped to US$1.27, up from the US$0.98 in August.

According to Barclays, the economic uncertainties in Taiwan will slowly dissipate, now that a new Cabinet has been formed to specifically tackle the economy. At the same time, Taiwan exports will have a stronger presence in China as tariffs will go down further starting this year, as dictated by the cross-strait economic cooperation framework agreement.

The economic research agency pointed out Taiwan was the only market in the Asia-Pacific region that posted a technical decline in the fourth quarter of 2011, due to three main reasons: reduced capital expenditure in the midst of economic uncertainties, a disastrous stock market, and a disruption to IT supply chains in the wake of the floods in Thailand.

Industrial output also declined in Q4 last year, due to suspensions in operations of the Formosa Plastics plants, the Thai floods, and lowered demands in Europe and China, Barclays said.

However, a recovery of the IT industry will take place in the second quarter, as manufacturers stock up on goods and as the negative effects of the Thai floods evaporate, Barclays said.

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