The Chung-Hua Institution for Economic Research (CIER) announced Taiwan’s September 2026 Purchasing Managers’ Index (PMI) on October 1, 2026. The manufacturing PMI increased by 0.9 percentage points to 63.4, representing the twelfth consecutive month of expansion and the fastest growth rate since August 2021. According to Hsien-Ming Lien, President of CIER, AI-related demand continues to support manufacturing activity. However, a more distinct sector rotation emerged in September. The electronics and optical industry sustained robust expansion, while the chemical, biotechnology, healthcare, and basic materials industries exhibited signs of acceleration. The October PMI is expected to serve as a critical indicator of changes in industry momentum.
Manufacturing PMI Remains Elevated as AI Demand Continues to Drive Growth
Lien noted that Taiwan’s PMI has remained above 60 for five consecutive months, demonstrating that AI-related demand is a primary driver of manufacturing activity. The electronics and optical industry, which has led the PMI’s increase over the past year, recorded a PMI of 62.6 in September. New orders expanded for the eleventh consecutive month, maintaining elevated overall activity.
However, production in the electronics and optical industry approached a plateau in September. The indexes for new orders and order backlogs each declined by more than 10 percentage points compared to the previous month, reaching their slowest expansion rates since December 2025. Lien observed that AI development has entered a phase of heightened competition, while Taiwan’s associated hardware remains a limited resource within the supply chain. Cloud service providers (CSPs) have also recently increased competition for manufacturing capacity. Consequently, the September data are more indicative of slower expansion in the electronics and optical industry rather than a significant decline in demand.
Rising Component and Raw Material Prices Shift Electronics Industry from Rapid Growth to High-Level Consolidation
Lien stated that rising component and raw material prices have gradually shifted the electronics and optical industry from a period of rapid, simultaneous growth in orders and production to high-level expansion with moderating order momentum. Mismatches between components in short supply and those in excess have also increased inventory pressures, making companies less willing to chase higher prices.
Notably, the electronics and optical industry’s six-month outlook index fell 6.9 percentage points to 62.4 in September. This indicates that companies remain positive about the economic outlook but have become more cautious than before.
Chemical, Biotechnology, Healthcare, and Basic Materials Industries Gain Momentum as Sector Rotation Becomes Evident
As momentum in the electronics industry moderated, raw material-related industries gained strength, partially offsetting the slowdown in new orders for the electronics and optical industry. The new orders index for the chemical, biotechnology, and healthcare industry increased to 60.0 in September, signaling a return to expansion. Order backlogs also entered expansion territory, and new export orders rose by 8.2 percentage points to 59.5.
The basic materials industry recorded stronger orders and production, with both indexes exceeding 60 in September. The supplier delivery times index rose 6.1 percentage points to 58.3, marking its fastest increase since May 2022. The order backlogs index also surged 12.8 percentage points.
Lien indicated that the September PMI revealed evidence of short-term sector rotation, and noted that sharp fluctuations in international oil prices have also significantly influenced industry performance. Previously, manufacturing activity was driven mainly by the electronics and optical industry. Recently, other industries have begun to gain momentum, a trend that requires ongoing observation.
The October PMI will serve as a critical indicator. It will help determine whether the electronics and optical industry can maintain its elevated level of expansion and whether the increased momentum in the chemical, biotechnology, healthcare, and basic materials industries will persist. The results will also provide insight into potential improvements in the K-shaped industrial development pattern driven by AI demand.
Source: Commercial Times (October 2, 2026). September PMI Reaches 63.4 as Long-Awaited Sector Rotation Emerges. Commercial Times. https://www.ctee.com.tw/news/20261002700044-439901