Taiwan's Manufacturing PMI Soars to 5-Year High on Booming AI Demand

Driven by soaring AI demand, Taiwan's manufacturing purchasing managers' index (PMI) hit a nearly five-year high of 61.4 in May. This marks the eighth straight month of expansion, fuelling supply chain activity and boosting exports.

A key manufacturing gauge in Taiwan hit nearly five-year high levels on the back of continued AI demand fuelling supply chain activity and boosting exports. The purchasing managers' index (PMI) climbed to 61.4 in May, rising 1.1 points from a month earlier, according to Chung-Hua Institution for Economic Research (CIER), Focus Taiwan reported.

This is the eighth consecutive month of expansion for the index and the highest since September 2021. A PMI reading of above 50 is read as expansion, while below 50 is contraction. The CIER attributed the expansion in manufacturing PMI to a robust growth in Taiwan's electronics and optical industry and its electrical and machinery equipment industry, the news report added.

AI Boom Fuels Economic Optimism

The data also showed that the sub-index for the business outlook over the next six months rose to 66.8 in May, up 2.9 points from a month earlier. "The overall economy is actually very strong," the report quoted CIER President Lien Hsien-ming as saying. He noted that the AI demand growth has continued to support AI-related industries, driving robust exports.

The AI boom is driving a "structural transformation" of many industries with its broader ecosystem of GPUs, CPUs and memory chips, noted CIER Vice President Chen Shin-Horng. The release of the data coincides with the Computex trade show being held in Taipei, which will see some of the world's top tech leaders speak on AI technology.

President Highlights Stability for Supply Chains

Taiwan's President Lai Ching-te stressed the importance of maintaining the political status quo to secure supply chains. "As the world's need for AI grows, so too does its need for a Taiwan that is stable, trustworthy, and capable of shouldering responsibility," a Reuters report quoted Lai, who was speaking at the opening ceremony of Computex in Taipei.

"The government will firmly safeguard peace and stability across the Taiwan Strait and is committed to maintaining the status quo," he added.

Taiwan is home to the world's largest chip contract manufacturer, TSMC, which makes high-end semiconductors for companies like Nvidia, AMD and Apple.

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