Taiwan's manufacturing activity expands at fastest pace in five years

Taipei, Oct. 1 (CNA) Amid continued strong demand for AI applications, Taiwan's manufacturing activity improved in September and expanded at the fastest pace in five years, the Chung-Hua Institution for Economic Research (CIER) said Thursday.

CIER, one of the leading economic think tanks in Taiwan, cited data as showing the September purchasing managers' index (PMI) in the manufacturing sector rose 0.9 points from a month earlier to 63.4 points, the highest level since August 2021.

PMI readings above 50 indicate expansion, while those below 50 show contraction.

By industry, the electronics and optical industry -- which has been the main driver of manufacturing PMI over the past year -- remained high in September at 62.6 percent, but with slowing momentum, down 2.6 points from a month earlier, CIER said.

Within that category, order momentum retreated by more than 10 percentage points, while unfulfilled orders dropped sharply by 11.7 percentage points, to 54.3 percent, marking their slowest rate of expansion since December 2025.

Jerry Pai (白宗城), a consultant at the Supply Management Institute, Taiwan (SMIT), said the sector was "on a high plateau," with overall momentum slowing but still robust, though future demand momentum, supply chain bottlenecks and inventory fluctuations warrant close attention.

Meanwhile, CIER President Lien Hsien-ming (連賢明) said that while the market has doubts regarding the rapid growth of AI demand, actual demand remains remarkably strong, with no current indicators of an AI bubble.

Among other sectors measured in the PMI, electrical & machinery equipment led with 64.4 percent, followed by basic materials (56.7), chemical & biomedical industries (56.2), food & textiles (56.1), and transportation equipment (53.2), according to the CIER.

PMI is measured through surveys of purchasing and supply chain executives, who report whether business conditions have improved, worsened or remained unchanged across several variables (such as new orders, production, employment and inventories) over the past month.