TAIPEI (Taiwan News) — Surging demand for chips and servers pushed Taiwan’s manufacturing sector to its strongest half-year performance since 2021, the Ministry of Economic Affairs reported Wednesday.

Industrial and manufacturing production indices for June rose 18.65% and 20.03% year-on-year, respectively — both setting new monthly records and extending a 16-month growth streak, per CNA. Second-quarter gains were the strongest in 16 years, with manufacturing output up 22.84%.

In the first half of 2025, the industrial production index rose 16.69% and manufacturing output increased 17.77%, the largest half-year jumps since 2021. The ministry projects July’s manufacturing index could grow by as much as 23.7%, despite ongoing uncertainty over US-Taiwan tariff talks.

Huang Wei-chieh (黃偉傑), acting head of MOEA’s Department of Statistics, said AI-related production centered in Taiwan remains resilient in the face of geopolitical risks. Semiconductors and servers were the main drivers, with the semiconductor index reaching 129.28 in June, up 22.8% year-on-year.

The computer, electronics, and optical products sector posted the most dramatic growth, surging 81.95% in June on the back of AI and cloud demand. The production index hit a record 251.56, driven by demand for servers, networking equipment, semiconductor testing tools, and industrial PCs.

Traditional sectors lagged behind. Machinery rose 6.3%, boosted by chip industry expansion, while metals, chemicals, and automotive declined. Basic metals fell 6.15%, chemicals dropped 1.94%, and vehicle production slipped 3.38%.

Regarding the recent US-Japan trade deal that cut Japan’s reciprocal tariff to 15%, Huang said it is too early to gauge its effect on Taiwan’s machinery exports. He added that complex global supply chains could either buffer or intensify the impact.