Power index shows warming economy in January, boosted by chip demand

Taipei, Feb. 24 (CNA) A power usage index released by the Taiwan Research Institute (TRI) Monday continued to flash a "yellow-red" light in January, signaling a warming local economy activity on the back of strong global demand for semiconductors.

Data compiled by the TRI, one of the leading economic think tanks in Taiwan, showed the January electric prosperity index (EPI) stayed in the yellow-red range in January.

However, electricity consumption of high voltage users fell 4.48 percent from a month earlier due to the reduced number of working days caused by the Lunar New Year holiday, the data showed.

The think tank uses a five-color system to gauge Taiwan's power consumption and economic activity. A blue light indicates economic contraction, yellow-blue signals sluggishness, green represents stable growth, yellow-red refers to a warming economy, and red points to a booming or overheating economy.

January was the ninth consecutive month that the EPI flashed a yellow-red light, according to the TRI.

The TRI said the local economy got a boost from solid global demand for semiconductors at a time when a booming era of development in artificial intelligence applications, 5G services, high-performance computing (HPC) devices and cloud services.

In addition, fears over U.S. President Donald Trump's threat to impose a tariff on semiconductors also prompted buyers to build up inventories ahead of schedule in January, the TRI said.

As a result, power consumption of the local semiconductor industry rose 1.8 percent with the EPI flashing a yellow-red light for nine months in a row, leaving behind of impact resulting from a long Lunar New Year holiday from Jan. 25 to Feb. 2, the TRI added.

Meanwhile, emerging technologies also benefited the computer, electronics and optoelectronics sectors with its EPI flashing another yellow-red light, the TRI said.

On the other hand, power consumption by the old economy sector still shrank in January on the reduced number of working days with the EPI in the chemical materials industry and the steel industry flashing a blue light and a yellow-blue light, respectively, the TRI said.

In the manufacturing sector as a whole, power consumption fell 5.21 percent from a year earlier in January, but its EPI still flashed a yellow-red light boosted by the semiconductor industry, the TRI added.

The TRI said the strength of the local manufacturing sector remained uneven. While the semiconductor industry was expanding production to meet demand and continued to see power consumption growing, the old economy industries still felt the pinch from seasonal factors.

The TRI added the Trump administration continued to create uncertainty to the global economy by impacting trade, investments and supply chains so that Taiwan's old economy industries came under pressure at a time when protectionism returned to haunt global trade.

The think tank said with Trump's trade policy expected to bring more uncertainty to global trade down the road, it is worth watching how his new measures will affect the local industries and the economy as a whole.