T&A: DigiTimes.com reported that Taiwan’s economy will shrink by 2.97% in 2009, on the back of a 0.12% growth in 2008. This according to a report by the Taiwan’s Directorate General of Budget, Accounting and Statistics (DGBAS).

Last year’s fourth quarter decline was a staggering 8.36%, the largest ever for a quarter and investment firms are predicting major contractions in 2009 due to a drop in exports. (Editor opinions: 4)

Paolo Manzano, Managing Editor, HWM Philippines

Paolo (HWM PH): On an editorial perspective, it may mean delayed launches as manufacturers struggle to get rid of inventory. We should be able to see it best at this year’s Computex, which I am sure will be one of the more muted editions of the show yet.

HWM Indonesia: A super power in IT, Taiwan has immersed (or exposed, rather) itself as a niche country that depends a lot on the evolution/revolution of the IT industry. The ups and downs of the IT industry, thus fluctuate the exports of the country. In the long run, these waves would eventually balance themselves as IT is becoming a commodity.

HWM Indonesia

However, the effects are felt harshly in the short run which in turn make the country very vulnerable to external factors. The economies of Taiwan’s importing countries have a direct correlation to how good or bad Taiwan’s economy is.From a country with few natural resources, human resources are the most (easiest) effected with the turbulence. Taiwan’s competitive advantage could be negatively impacted, as an exodus of intellectual minds have actually started to more developed countries, like the US, Canada, or Australia. Steps have to be made to prevent this long term emigration, if Taiwan still wants to be an IT super power in the long run.

David (HWM SG): The Taiwanese tech industry is heavily affected by the falling US dollar, a situation also faced by the Japanese. Ironic how a stronger national currency (i.e. stronger Yen vs weak US Dollar) leads to extra paper losses simply because a large portion of their worldwide revenue is determined in USD.

David Chieng, Editor, HWM Singapore

What I fear will happen is that in their bid to keep costs low, innovation will stall as a result of slashed R&D funding. On the other hand, this can also mean opportunities for organic growth by companies with large hoards of cash handy (i.e. a firm with its name starting with ‘i’ and ending with ‘l’ perhaps?), as tech they’ve been eyeing will be so much cheaper to acquire. After all, why bother spending money on R&D when you can simply buy over the competition?

To compound the situation, stiff competition results in even lower margins overall, making it imperative that ever higher volumes of shipments are necessary to meet profit expectations. Blame the mini ultraportable notebooks, for example. The cheap laptops move by the millions, sales couldn’t be better, but each cheap laptop nets the makers so much less than a standard laptop.

Vijay Anand, Editor, HardwareZone.com

Vijay (HardwareZone.com): I expect new products and innovations to still pull through as scheduled through the first half of this year since most of these were already planned well in advance. Taiwanese vendors who supply the actual products (motherboards, GFX) will still face stiff competition amongst themselves with numerous global and home-grown brands; we can expect more consolidation, spin-offs or closures this year.The end result is less spending power by these companies until the economy picks up again.

For consumers who are tightening their belts now, it might look reasonable that there might be slower releases of new stuff.

However if the whole industry slows down to delay their launches or production schedules, then there becomes an even less a reason for consumers to even want to spend, thus less revenue, less jobs created, etc.

The ripple effect has started, but we can only hope that companies keep up their future plans and execute it to their best efforts to keep consumer interests up, and generating revenue opportunities to counter the gloom.

The problem of keeping up to previously planned schedules for new launches would likely be more apparent from the second-half of 2009 and might ripple through mid 2010 at least.

It’s a good chance that AMD might increase their market share this year in both GFX and CPUs as they do have more economical offerings that bring more value to the customer from a platform perspective – at least when not factoring too much into future-proofing.