Taipei:Taiwan's manufacturing sector maintained its rapid growth in September, driven by strong global demand for AI devices, although an index evaluating the sector's condition showed a decline compared to the previous month. The Taiwan Institute of Economic Research (TIER) reported this development on Friday.
According to Focus Taiwan, the TIER composite index, which measures the overall health of the manufacturing sector, decreased by 0.26 points from a revised figure of 16.48 in August to 16.22 in September. Despite the drop, the index remains within the "yellow-red" light range, indicating fast growth between 16 and 18.5.
The decrease in the September index was attributed to slower growth in industrial production and export orders. TIER employs a five-color system to assess activity levels "red" for booming or overheating, "yellow-red" for fast growth, "green" for stable growth, "yellow-blue" for sluggish growth, and "blue" for contraction.
In September, among the five factors comprising the index, the sub-indexes for the general business climate and raw material purchases increased by 0.40 and 0.01, respectively, from a month earlier. Meanwhile, the sub-indexes for demand, pricing, and costs declined by 0.49, 0.15, and 0.03, respectively.
A survey conducted in September revealed that 35.63 percent of respondents in the manufacturing sector reported their operations flashed a green light, an increase from 20.13 percent in August. Additionally, 23.54 percent indicated a yellow-red light, down from 30.79 percent the previous month, and 26.08 percent reported a red light, a decrease from August's 29.89 percent.
By industry, the electronics component sector continued to benefit from increased orders for advanced chips and IC assembly and testing services, as well as memory chips, continuing to flash a red light. The computer and optoelectronics industry also maintained a red light status due to heightened demand for AI infrastructure, cloud services, servers, and internet communications products.
In contrast, the machinery industry flashed a red light in September, up from a yellow-red light in August, driven by sustained demand from semiconductor manufacturers looking to expand production. The plastics/rubber industry experienced a decline in its production index growth, showing a green light in September after a yellow-red light in August.
The auto/auto parts industry continued to display a yellow-blue light in September, as some suppliers and dual-purpose vehicle manufacturers reduced their production to align with market conditions.
Looking forward, TIER anticipates that AI development will continue to support Taiwan's manufacturing sector. However, uncertainties such as military conflicts in the Middle East, energy price fluctuations, and rising borrowing costs could impact investments and consumption.
