The nation’s industrial production last month fell 15.2 percent year-on-year, the mildest decline in three months, as a spike in demand for servers for artificial intelligence (AI) applications helped mitigate a contraction in manufacturing production, the Ministry of Economic Affairs said yesterday.
The industrial production index last month dropped to 85.44, matching the ministry’s expectations, while manufacturing production, a major contributor to industrial output, fell 15.68 percent annually to 84.24 last month.
On a monthly basis, the industrial and manufacturing production indices grew 2.64 percent and 2.21 percent respectively, ministry data showed.
Photo: CNA
“The significant growth in server orders was the highlight of the manufacturing production index last month. That helped boost production in the computer and optoelectronics category, which rose 20.65 percent month-on-month to 120.47, an all-time high,” Department of Statistics Deputy Director-General Huang Wei-jie (黃偉傑) said by telephone.
On an annual basis, the computer and optical components segment rose 8.4 percent, the only growth area among the six major segments last month.
The ministry said it expects the rise in AI server orders to extend into this month, which would help cushion a downtrend in industrial and manufacturing production amid a lukewarm rebound in consumer electronics demand worldwide.
China’s sputtering economy poses a risk to local manufacturers, as it remains the largest export destination for Taiwan, it said.
“We expect to see a gradual and slow rebound in the remainder of this year as consumer demand remains soft — China, in particular,” Huang said. “Although orders tend to increase in August and September ahead of launches of new consumer electronics, it remains to be seen how the effect will play out.”
The ministry said it expects the manufacturing production index this month to be between 82.84 and 86.84, indicating that it would fall 1.7 percent, or climb 3.1 percent from last month.
Slowing demand for automobiles is also a factor affecting the index as consumers tend to hold back on vehicle purchases during Ghost Month, the seventh month in the lunar calendar, it said.
On an annual basis, manufacturing production would fall between 14.5 and 18.5 percent, it added.
The production of electronic components plunged 22.92 percent year-on-year, dragged by the semiconductor sectors’ slump of 25.61 percent annually, which the ministry attributed to sagging consumer electronics demand and ongoing inventory corrections.
On a sequential basis, production of electronic components rose 0.89 percent.
The production of basic metals, mostly steel, fell 7.94 percent year-on-year, but was up 3.97 percent month-on-month, as a slowdown in the domestic property market cut steel demand, the ministry said.
Steelmakers shut down some furnaces to cope with dwindling demand, it said.
Production in the petrochemicals sector dropped 12.01 percent annually last month due to dwindling demand for chemicals used in raw wafer manufacturing. Machinery tools production plunged 18.64 percent year-on-year, and was down 2.55 percent monthly, as businesses slowed down capacity expansion in response to a weak macroeconomy globally.
The production of automotive-related products fell 4.39 percent annually last month due to fewer orders for auto parts, the ministry said.
On a monthly basis, production increased 3.6 percent, on the back of improving auto chip supply.
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