Industrial output rises 11.78%, driven by AI demand

Taiwan's industrial production experienced a robust surge of 11.78% year-on-year last month, reaching an index of 136.65. This significant growth was primarily fueled by sustained demand for artificial intelligence (AI) and high-performance computing applications, which boosted output in the crucial information technology and electronics sectors, according to the Ministry of Economic Affairs.

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The stronger-than-expected performance was driven by continued expansion of AI infrastructure, which boosted output of wafer foundry services, memory chips and electronic components.

The manufacturing production index, representing 93.72% of overall industrial output, climbed 12.68% year-on-year to 139.12. This marks the 27th consecutive month of growth for the manufacturing sector, surpassing the ministry's own forecast range of 8.4% to 11.6%. The stronger-than-expected performance is attributed to the continued expansion of AI infrastructure, driving increased output in wafer foundry services, memory chips, and electronic components.

Specifically, output of computer, electronics, and optical products saw a substantial 36.62% year-on-year increase, driven by high demand for servers, switches, and semiconductor inspection equipment for cloud and data center applications. Electronic component output also rose by 12.17%, supported by demand for 12-inch wafers, DRAM chips, and IC packaging services. In contrast, flat-panel display production declined by 9.42% as demand eased after a pre-event surge for major sporting events.

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Last month, output of computer, electronics and optical products rose 36.62 percent year-on-year, driven by strong demand for servers, switches, semiconductor inspection equipment and other products used in cloud and data center applications.

Traditional industries also demonstrated resilience, with machinery output rising 10.68% year-on-year, marking the third consecutive month of growth, bolstered by investments in chipmaking and power transmission equipment. Base metal output increased by 8.19%, supported by demand from the semiconductor industry and China's steel production cuts. While chemical materials output fell due to weak demand and maintenance, auto parts saw a modest rise driven by electric vehicle production. The ministry remains optimistic about continued growth for the remainder of the year.

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Traditional industries have shown steady growth since March, although the pace of recovery varies across industries.