December manufacturing data indicates strength and diversity of AI demand
TAIPEI (Taiwan News) — Taiwan’s manufacturing Purchasing Managers’ Index rose 3.9 percentage points in December 2025 to 55.3, marking the third consecutive month of expansion and the highest level in more than a year and a half, per CNA.
The Chung-Hua Institution for Economic Research said growth in Taiwan’s artificial intelligence supply chain and improving manufacturing confidence drove the increase. It said the strong end-of-year performance also reflects growth since the imposition of Trump’s tariffs.
The seasonally adjusted PMI for December rose to 55.3, the fastest expansion rate since June 2024, driven primarily by a sharp increase in new orders. The outlook index for the next six months stood at 51%, marking the first positive outlook since tariffs were imposed in April 2025.
By industry, the electronics and optics sector continued to perform strongly, driven by AI-related demand. It remained the main driver behind accelerated growth in new orders and production across the manufacturing sector.
CIER said next-generation AI computing products have entered mass production and shipment, while surging demand for customized AI chips from cloud service providers has boosted demand for high-end wafers, substrates, packaging, power supplies and memory in Taiwan.
In addition, shortages and rising prices of traditional memory products have prompted customers to accelerate shipments of complete products to control costs, further increasing demand for related electronic components. As a result, the unfulfilled orders index shifted from contraction to expansion after six consecutive months, while the electronics and optics sector’s outlook index for the next six months rose by 11.6 percentage points to 58.8%, indicating expansion.
CIER Associate Researcher Chen Hsin-hui (陳馨蕙) said earlier discussions on AI largely focused on Nvidia’s supply chain, but Google’s recent progress has created another engine of growth for Taiwan.
She said the AI market is currently divided into two major camps: the GPU-based ecosystem led by Nvidia and the customized chip segment centered on application-specific integrated circuits.
Pai Tsung-cheng (白宗城), head of the Supply Management Institute, said that in recent years, the AI boom was almost entirely dominated by OpenAI. Google, after a long period of relative inactivity, has made a strong comeback, creating competition between the two camps. “Regardless of who wins, it’s good for Taiwan,” Pai said.
CIER President Lien Hsien-ming (連賢明) said Taiwan is a major supplier in the global AI industry, with a market share of 80% to 90%. He added that multiple indicators suggest AI will continue to be a major driver of PMI growth.
Despite concerns over a potential AI bubble, Academia Sinica economist Kamhon Kan (簡錦漢) said AI-related business opportunities are expected to continue expanding this year. “Whether it will burst or not is unknown, but at least it won’t burst in 2026.”
Sean Scanlan
Taiwan News, Staff Writer
Jan. 4, 2026