Industrial production index down 1.1 percent

MANUFACTURING:
‘Robust demand for emerging technologies … continued to drive demand for advanced chips,’ the Department of Statistics deputy director-general said

• By Lisa Wang /
  Staff Reporter

The industrial production index dropped 1.1 percent year-on-year last month, as declines in traditional industries offset rising demand for artificial intelligence (AI) devices, servers, memory chips and flat-panel displays, the Ministry of Economic Affairs said yesterday.

Industrial production measures the change in the value of output produced by manufacturers, utilities and mines.

Last month, manufacturing output, which accounted for 95.39 percent of the industrial production index, dropped 1.2 percent annually, compared with the ministry’s projection of a decline 1.3 to 6.3 percent.

Photo: RITCHIE B. TONGO, EPA-EFE

“Manufacturing production was better than we expected last month as robust demand for emerging technologies mainly AI and high-performance computing (HPC) continued to drive demand for advanced chips,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.

Commenting on reports that China has banned chips from Intel Corp and Advanced Micro Devices Inc in government PCs and servers, which could lead to order cutbacks on their chip supplier Taiwan Semiconductor Manufacturing Co (台積電), Huang said the impact remained to be seen.

This month, manufacturing output is expected to grow at an annual pace of between 1.5 and 6 percent, and grow between 5.3 and 6.9 percent annually this quarter, marking the first quarterly expansion since the third quarter of 2022, he said.

“The growth will continue over the remainder of the year, thanks to the improving global economic outlook driven by the resilient US economy,” benefiting Taiwanese manufacturers of chips, servers, electronic products and optical components, Huang said.

The production of electronic components, mainly semiconductors and displays, last month grew for a second consecutive month, up 9.8 percent annually, and expanded 10.11 percent during the first two months, as increased demand for AI and HPC devices, largely servers, boosted foundry companies’ 12-inch fab utilization, the ministry said.

The production of computers and optical components rose 3.86 percent annually last month, marking eight months of increases. In the first two months, computer and optical component production jumped 18.28 percent on the back of AI applications, cloud-computing services and camera lens upgrades, the ministry said.

Compared with the strong performance of the electronics industry, traditional industries were still struggling to emerge from a prolonged downturn.

The production of base metals, mostly steel, dropped 10 percent year-on-year last month, but expanded 3.78 percent during the first two months, thanks to inventory rebuilding demand and a lower comparison base, the ministry said.

The production of machine tools sank 10.41 percent last month, but increased 3.65 percent in the first two months also because of a lower comparison base.

The production of automotive products plummeted 19.48 percent last month but increased 8.82 percent in the first two months due to demand for electric vehicles and vehicle components.

The petrochemicals sector saw production decline 9.07 percent last month and drop 0.34 percent in the first two months as supply chain inventory remained high, the ministry said, adding that capacity expansion by foreign producers dampened demand for Taiwanese goods.