Chip Surplus Decreases U.S. High Tech Trade Deficit

The U.S. High Tech trade deficit fell by one-third in March to $1.2 billion as exports increased 5.2 percent and imports declined 1.3 percent in the monthly Census Bureau report. A bigger semiconductor trade surplus accounted for half of the improvement while computers, computer accessories and telecom

This is pre-SARS data. Trade data may be erratic this quarter as cancelled meetings disrupt planned trade flows.

Overall, the U.S. trade deficit rose $2.9 billion in March as imports increased more than exports.

The depreciation of the dollar has resumed since March, especially in early May, so exports are expected to continue to rise faster than imports because U.S. goods have become more price competitive.

The weaker dollar will be more of a boost to non-technology manufacturers because the dollar has weakened most in Europe and Canada. The dollar declined 19.3 percent against the Euro from the Feb 2002 peak value through April and has fallen 6.7 percent more by May 12th. Similarly, in Canada, the dollar declined 8.6 percent through April and then 4.8 percent more through May 12th.

The Electronic News electronic components trade-weighted value of the dollar index has fallen only 3.2 percent since February 2002 and has slipped only 0.6 percent in early May because many of the larger Asian electronics manufacturing countries peg the value of their currency to the U.S. dollar. Still, this has been enough to spur component and semiconductor exports and restrain imports.

The country weights in the exchange rate index are the country’s share of total electronic component and semiconductor trade with the U.S.

China, Hong Kong and Malaysia hold their currencies at a constant value to the U.S. dollar. Singapore, Taiwan and Thailand actively restrain currency fluctuation against the U.S. dollar.

Author Information

Jim Haughey is director economics for Reed Business Information, the parent company of Electronic News .