LowIV Macro Policy & Sovereign Debt1 October 2026, Thursday
AI demand lifts Taiwan's manufacturing PMI to a five-year high
September data from the Chung-Hua Institution for Economic Research (CIER) put Taiwan's manufacturing PMI at 63.4, its highest level since August 2021. Demand for AI hardware is driving growth, but there are signs of a slowdown in electronics orders.
A reading above 50 on the PMI, or purchasing managers' index, indicates that the sector is expanding. The Taipei Times reported on 2 October that CIER's manufacturing PMI rose from 61.7 in August to 63.4 in September. Focus Taiwan, however, gave the monthly increase as 0.9 points, and the two figures do not match. The new orders index fell 2.9 points to 63.6. The six-month outlook index rose to 59.5, its highest level since May 2024. The non-manufacturing index, at 56.9, showed expansion for the 19th month in a row.
According to Focus Taiwan, the electronics and optical industry stood at 62.6 in September, but order momentum in this segment fell by more than 10 points. Electrical and machinery equipment at 64.4, basic materials at 56.7, and chemicals and biomedical at 56.2 all remained in expansion territory. In a separate survey released on 30 September, the S&P Global manufacturing PMI rose from 54.7 in August to 56.7. Output growth was the fastest in more than 5 years. According to the Taipei Times, industry representatives speaking on 2 October said energy costs had sharply raised raw material prices. They added that the gap between technology and other sectors was widening.
Talay assessment
Bottom line
Two separate surveys rising at the same time confirm that Taiwanese manufacturing accelerated in September on demand for AI hardware. Yet the 2.9-point drop in new orders and a fall of more than 10 points in electronics order momentum suggest the peak may be near. Energy-driven raw material costs stand out as the main factor limiting growth outside technology.
Likely effects
- Global AI hardware supplyPositiveWeeks
Higher output at Taiwanese factories could ease near-term bottlenecks in the supply of AI servers and components.
- Taiwan's growthPositive1–6 months
The rise in the six-month outlook index to 59.5 shows that manufacturers expect growth to continue in the coming period.
- Cost pressureNegative1–6 months
Energy-driven increases in raw material prices are squeezing profit margins for non-technology manufacturers and making growth uneven.
Possibilities, ranked
- 1Flat at a high level55%
The PMI stays high, but further gains are limited because new orders are easing.
Watch: CIER's October PMI and new orders index, due around 1 November
- 2Loss of momentum35%
The decline in electronics order momentum continues, and the PMI falls back by a few points.
Watch: A marked drop in the electronics and optical sub-index from September's 62.6
- 3New peak10%
AI orders accelerate again, and the PMI exceeds September's 63.4.
Watch: Taiwan's October export orders and TSMC's October revenue
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- CIER manufacturing PMI▲ 63.4
- New orders index▼ −2.9 points
- S&P Global manufacturing PMI▲ 56.7
- Non-manufacturing index▲ 56.9