Industrial production rose 6.01 percent year-on-year last quarter, snapping six quarters of losses, due to robust demand for artificial intelligence (AI) devices, high-performance computing (HPC) applications and data centers, the Ministry of Economic Affairs said yesterday.
Manufacturing output, which accounted for nearly 95 percent of industrial production, climbed 6.16 percent year-on-year in the first quarter, the first pickup since the second quarter of 2022, the ministry said.
The manufacturing surge was mainly driven by the semiconductor industry, which jumped 13.46 percent annually last quarter amid robust demand for AI chips, it said.
Photo: Ritchie B. Tongo, EPA-EFE
Industrial production also measures the change in the value of output produced by utilities and mines, the ministry said.
The ministry expects the growth momentum in industrial production to carry over into this quarter and forecast that manufacturing output would expand between 11.1 percent and 16.4 percent annually this month.
“We believe manufacturing production would improve every quarter for the remainder of this year, primarily backed by the semiconductor and electronic components segments. AI-related applications will continue to be the growth drivers,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone yesterday.
“However, the traditional sector is seeing a slow recovery, given lukewarm macroeconomic conditions. That could limit the growth of manufacturing output,” he said.
Asked about potential downside risks, Huang said the ministry would closely monitor geopolitical tensions, particularly in the Middle East, amid fears that conflict in the region could curb crude oil exports, leading to higher energy prices and undermine efforts by the US and other major economies to contain inflation.
“The return of high inflation would dampen consumer confidence. Consumers might balk at spending on new electronics again,” Huang said.
The production of electronic components, mainly semiconductors and displays, jumped 11.12 percent annually last quarter, thanks to strong demand for chips used in AI and HPC devices, the ministry said.
Chip designers, printed circuit board makers and DRAM suppliers also benefited from the AI boom, it said.
The production of computers and optical components increased 17.69 percent from a year ago, bolstered by higher demand for AI and cloud-based data centers, the ministry said.
Smartphone camera lenses demand also rose, thanks to specification upgrades.
The production of base metals, mostly steel, edged up 0.01 percent last quarter, ending 10 quarters of declines, but the recovery remained bumpy, given tepid demand and price competition, the ministry said.
Machinery output dropped 2.93 percent year-on-year last quarter as businesses were hesitant to invest in new equipment amid a slow global economic recovery, it said.
The production of automotive products rose 1.35 percent annually last quarter as increasing demand for electric vehicles offset weakness in sales of fossil fuel-powered cars and heavy trucks.
Petrochemicals saw production contract 3.28 percent year-on-year last quarter due to overcapacity and growing competition from overseas, the ministry said.
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