Taipei:Taiwan's manufacturing activity saw significant improvement in September, expanding at its fastest pace in the last five years due to strong demand for AI applications.
According to Focus Taiwan, the Chung-Hua Institution for Economic Research (CIER) reported that the purchasing managers' index (PMI) for Taiwan's manufacturing sector increased by 0.9 points from the previous month, reaching 63.4 points. This marks the highest PMI level since August 2021. A PMI above 50 indicates expansion, while below 50 suggests contraction.
In the electronics and optical industry, which has been a key driver of the manufacturing PMI, activity remained high at 62.6 percent in September. However, momentum slowed, declining by 2.6 points from the previous month. Within this industry, order momentum fell by over 10 percentage points, and unfulfilled orders dropped sharply by 11.7 percentage points to 54.3 percent, the slowest expansion rate since December 2025.
Jerry Pai, a consultant at the Supply Management Institute, Taiwan (SMIT), noted that the sector is "on a high plateau," with overall momentum slowing yet remaining robust. He emphasized the need to closely monitor future demand momentum, supply chain bottlenecks, and inventory fluctuations.
CIER President Lien Hsien-ming addressed market concerns about the rapid growth of AI demand, stating that actual demand remains strong with no signs of an AI bubble.
Among other sectors measured in the PMI, the electrical and machinery equipment sector led with 64.4 percent, followed by basic materials at 56.7 percent, chemical and biomedical industries at 56.2 percent, food and textiles at 56.1 percent, and transportation equipment at 53.2 percent. The PMI is determined through surveys of purchasing and supply chain executives regarding business conditions over the past month.