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The percentage of companies expecting the situation to improve increased from last month, but the percentage of companies expecting the situation to worsen due to concerns about energy supply also increased.
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Crystal Hsu / Staff Reporter
Business confidence in Taiwan’s manufacturing, services and construction industries rose last month, reaching multi-year highs, as the artificial intelligence (AI) boom continues to boost exports, investment and domestic demand, according to a survey released yesterday by the Taiwan Institute of Economic Research (TIER).
The Taipei-based institute said the findings suggest that Taiwan’s AI-led expansion is boosting and supporting business confidence, despite remaining external risks.
According to the institute, the manufacturing industry’s economic index rose for the second consecutive month to 99.58 from April’s revised value of 96.92, the highest level since June 2024.
Photo: CNA
“The AI boom is driving Taiwan’s exports and economic growth to record levels, and the momentum is spilling over into domestic investment, consumption and financial markets,” TIER economist Gordon Sun said at a press conference in Taipei.
Manufacturers are cautiously optimistic about the next six months, Sun said.
He said the percentage of companies expecting the situation to improve rose to 29% from 28.2% last month, while the percentage expecting the situation to worsen rose from 11.8% to 14.6%, reflecting lingering concerns over energy supplies despite the easing of geopolitical tensions in the Middle East.
According to the institute, Taiwanese semiconductor manufacturers are expanding production capacity to meet strong AI-related demand, supporting high utilization rates across advanced manufacturing, packaging and testing facilities.
Tough conditions in the conventional DRAM market are also benefiting local memory manufacturers.
Along with a gradual recovery in end-market demand, this trend is expected to improve order visibility across the semiconductor supply chain, it added.
More than 30% of electronics and machinery companies surveyed are optimistic about business conditions over the next six months, while around 60% expect business conditions to remain stable, the institute said.
The outlook was even more mixed for traditional industries.
The institute said a potential normalization of shipping through the Strait of Hormuz could ease feedstock supply pressures and reduce costs for petrochemical manufacturers, while seasonal demand and inventory replenishment ahead of the third-quarter peak season could support shipments.
However, the company said weak demand in key markets, including China and India, and increased exports of low-cost Chinese petrochemicals and plastic products continued to pressure prices and margins.
It was found that nearly 40% of chemical manufacturers said that business confidence may still worsen.
In the services sector, the confidence index rose to 100.62 last month, the highest level since April 2021, as financial institutions continued to benefit from growing demand for AI-related investment loans and increased stock market activity, increasing loan growth and interest income, Sun said.
Confidence in the construction sector also rose to 103.99, with housing transactions in Taiwan’s six special cities up 5.6% month-on-month, rising for the second straight month, supported by homebuyer sentiment and a recovery in demand ahead of the expiration of preferential mortgage terms.
TIER researcher Alisa Liu said the housing market is expected to enter a correction phase after the central bank left interest rates and lending limits unchanged last week.
