Taiwan’s manufacturing sector hit a five-year high in August amid strong global demand for AI-related hardware, with robust orders and positive outlooks signalling ongoing growth, despite supply chain pressures.
Taiwan’s manufacturing sector continued to strengthen in August, with a key business survey rising to its highest point in five years as global demand for AI-related hardware stayed firm, according to the Chung-Hua Institution for Economic Research. The institute said the manufacturing purchasing managers’ index climbed to 62.5 from 61.5 in July, extending the expansion streak to 11 months and reaching its strongest reading since July 2021. Orders, production and hiring all improved, while the six-month outlook remained elevated, suggesting firms still expect conditions to stay supportive.
The survey pointed to robust demand for AI servers, advanced memory chips and high-speed optical communications equipment as a major driver of the gain. CIER president Lien Hsien-ming said the figures reflected Taiwan’s strong export performance during the AI boom, although tight supply chains and more expensive raw materials are creating pressure in some parts of the production process. The institute also said shortages of inputs were slowing inventory replenishment and lengthening delivery times.
The broader economic picture is also being shaped by a separate upturn in industrial sentiment. Taiwan Institute of Economic Research said in July that the manufacturing sector moved into its prosperity zone for the first time in more than five years, driven by emerging technology applications, preparations for new consumer electronics and better orders in traditional industries such as petrochemicals. That adds to evidence that the island’s industrial base is benefiting from the wider semiconductor and AI cycle.
Not all parts of the economy are moving at the same pace. CIER said its non-manufacturing index slipped in August, although it remained above the 50-point line that separates expansion from contraction. Lien said the service sector had become more cautious amid stock market volatility. The softer services reading comes as the government has extended wage support for nine manufacturing sectors and is stepping up industrial upgrading efforts, while SEMICON Taiwan 2026 is expected to draw more than 100,000 professionals this week, underlining the scale of demand linked to advanced chips and AI infrastructure.
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