Manufacturing sector remains stable in June: TIER

Taipei, July 31 (CNA) The local manufacturing sector stayed stable in June, benefiting from the global economic recovery and an AI-induced frenzy that sparked a rally in chipmaker stocks across the globe, the Taiwan Institute of Economic Research (TIER) said Wednesday.

Data compiled by the think tank showed that the composite index gauging Taiwan's manufacturing fundamentals rose to 14.10 in June, up 0.46 points from May, with the business climate monitor flashing a "green light" for the third consecutive month.

TIER uses a five-color system to assess economic activity in the sector, with "red" indicating overheating, "yellow-red" showing fast growth, "green" representing stable growth, "yellow-blue" signaling sluggish growth, and "blue" meaning contraction.

In the manufacturing sector, the production and exports of computers, electronics and optical products registered sharp year-on-year increases last month, fueled by strong demand for AI and cloud-based services and for testing equipment to meet the needs of the booming semiconductor industry, TIER said.

In June, the business climate monitor for the computer, electronics and optical industries flashed a "yellow-red" light for a second consecutive month, TIER said.

TIER noted that the high-tech and other conventional businesses enjoyed strong growth in production and exports in recent weeks.

It added that the overall outlook for the manufacturing sector over the second half of the year was positive, but that the outcome of the U.S. presidential election in November and AI development could impact Taiwan's economic momentum.

Citing a recent forecast by Gartner, TIER said worldwide IT spending is expected to total US$5.06 trillion in 2024, an increase of 8 percent from 2023. Gartner also predicted global IT spending will surpass US$8 trillion before the end of the decade given the growing demand for AI.

The think tank, nevertheless, pointed out that whether AI development will lead to widely expected investment returns was uncertain, which could result in a fall in demand and corresponding lower revenues logged by domestic companies.

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