Taiwan industrial production returns to growth in 2024 on AI demand

Taipei, Jan. 23 (CNA) Taiwan recorded its first growth in industrial production in 2024 after two consecutive years of decline, driven by demand for artificial intelligence (AI) applications and high-performance computing (HPC) devices, the Ministry of Economic Affairs reported Thursday.

Ministry data showed the full-year industrial production index rose 11.45 percent in 2024 from a year earlier. This followed a year-on-year surge of 19.97 percent to 108.55 in December.

The December surge was boosted by the manufacturing sub-index, which grew 20.79 percent that month from a year earlier, hitting a new single-month high of 109.01, the ministry said in a statement. This was largely due to strong demand for AI, HPC and cloud data processing applications.

The manufacturing sub-index accounts for more than 90 percent of the total index, according to ministry data.

The ministry added that the need to maintain inventory levels ahead of the Lunar New Year holidays, which begin on Saturday in Taiwan, also contributed to the growth in the manufacturing sector.

In 2024, production in the electronic components industry rose 19.52 percent year-on-year, driven by semiconductor suppliers, whose production surged 25.12 percent to a record high of 109.98, Huang Wei-jie (黃偉傑), deputy head of the Ministry of Economic Affairs Department of Statistics, said at a news conference Thursday.

Production in the computer and optoelectronics industry surged 27.61 percent year-on-year to another record high of 138.38 in 2024, driven by increased output of servers, semiconductor testing equipment and components, according to the data.

Huang said the two industries accounted for 90 percent of the 11.93-percent growth recorded in the manufacturing sub-index in 2024 from the previous year.

Among the old economy sectors, only the machinery industry recorded growth in 2024, rising 3.33 percent from 2023 due to the strong performance of semiconductor production equipment, Huang said.

The base metal industry, the chemical material and fertilizer industry, and the auto and auto parts industry posted year-on-year declines of 0.44 percent, 0.55 percent and 6.88 percent, respectively, according to the ministry.

Overcapacity in China led to weak production in old economy sectors, while the auto and auto parts industry faced reduced export orders and inventory adjustments in the West, Huang said.

Looking ahead, Huang said the manufacturing sector's performance will depend on whether China's economic recovery can reduce overcapacity and how U.S. President Donald Trump's policies impact the global supply chain.

However, Taiwanese businesses are highly flexible and established production sites around the world during Trump's first term, Huang pointed out.

"Because of our experience last time, we can react better now," he said.