Strong AI demand boosts Taiwan manufacturing sector in February

Taipei, March 27 (CNA) Taiwan's economy remained warm in February as strong demand for artificial intelligence (AI) chips bolstered its manufacturing sector, the National Development Council (NDC) said on Thursday.

According to the NDC's monthly data, the index gauging the state of the country's economy flashed a yellow-red light in February, indicating warming sentiment.

It was the second consecutive month with a yellow-red signal, with the composite index rising by two points to 37, the highest figure within that range.

However, Chiu Chiu-ying (邱秋瑩), head of the NDC's Department of Economic Development, remained cautious when asked whether the index would flash red in March.

Instead of giving a clear yes or no, she stressed the importance of leading indicators in forecasting economic trends, noting that the leading index rose by 0.64 percent to 103.35, marking four consecutive months of growth.

The NDC uses a five-color system to gauge the country's economic performance, with blue indicating contraction, yellow-blue suggesting sluggishness, green signifying stable growth, yellow-red reflecting a moderately hot economy, and red pointing to an overheated economy.

Among the nine sub-indexes, only two showed bullish changes. The sub-indexes measuring sales in the manufacturing sector and revenue generated by retailers, wholesalers, and food and beverage businesses both flashed red, rising from a green and yellow-blue light, respectively.

In addition to manufacturers' factory expansion, which drove an increase in the total floor area of new building construction projects, Chiu said strong demand for AI chips also boosted imports of semiconductor equipment.

The only decline was seen in overtime hours in the industrial and service sectors, which fell from a yellow-red light to green.

Meanwhile, the other six sub-indexes in the February composite index -- merchandise exports, money supply, changes in stock prices, imports of machinery and electrical equipment, business sentiment among manufacturers, and industrial production -- remained unchanged.