Taiwan’s manufacturing output saw a 14.09% increase in the second quarter of this year, reaching NT$4.81 trillion (US$150.17 billion), according to the Ministry of Economic Affairs. The rise was driven by strong demand for electronics, particularly those used in artificial intelligence (AI), high-performance computing, and cloud data centers. The growth in output was also supported by the completion of inventory adjustments in some non-tech sectors and a low comparison base from the same period last year. Taiwan’s manufacturing industry is a critical component of its export-oriented economy, producing key products like advanced chips, AI servers, and storage devices.
The computer electronics and optical devices sector experienced the largest growth, with output increasing by 56.89% to a record NT$410.5 billion. This surge was fueled by the ongoing demand for AI-related products and the restocking needs of smartphone brands. Taiwan is a major supplier of camera lenses for global smartphone brands, including Apple’s iPhone series. Overall, electronic components saw a 24.82% increase in output, totaling NT$1.52 trillion for the quarter. The semiconductor sector had its best performance to date, growing by 37.71% to NT$970.7 billion, driven by the AI boom and increased demand for 12-inch wafers.
However, the flat panel and related devices sector faced challenges, with output declining by 5.29% year-on-year to NT$127.6 billion due to weak demand in the TV and notebook computer markets. In non-tech sectors, there was modest growth. The chemical and fertilizer industry grew by 11.13%, and the base metal sector saw a 6.82% increase. Machinery equipment suppliers reported a 4.2% rise in output, thanks to improving demand from semiconductor firms. Local semiconductor companies are expanding capacity to meet the growing demand for AI-related products from U.S. customers.
Business from China, Taiwan’s largest export market, remained subdued due to economic challenges in the region. The auto parts sector experienced a 4.26% decline in output, as sales of fuel-powered vehicles faced increasing competition from electric vehicles and global competitors. Despite challenges like restrictive monetary policies and global competition in the technology sector, Taiwan’s tech industry continues to benefit from significant investments in AI development by major U.S. technology companies, which is positively impacting local supply chains.
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