TAIPEI (Taiwan News) — Taiwan’s manufacturing output rose 11% year-on-year to NT$5.35 trillion (US$176.7 billion) in Q2, driven by strong demand for AI chips and servers, the Ministry of Economic Affairs said Tuesday.

Electronics led the gains, with electronic component output reaching NT$1.9 trillion, up 26% from a year earlier, per CNA. The integrated circuit sector surged 29% as AI and high-performance computing spurred wafer foundry expansion, though weak demand for consumer electronics dragged panels and parts down 6.5%.

Server demand tied to AI also boosted the computer, electronics, and optical products sector, which jumped 73% to NT$708 billion. The ministry said the results underscore Taiwan’s role as a hub for next-generation data infrastructure.

Traditional industries, however, reported declines amid global uncertainty and factory maintenance. Chemical materials and fertilizers dropped 20%, basic metals fell 13%, and auto production slid 8%. By contrast, machinery and equipment rose nearly 4% as semiconductor firms invested in advanced processes.

Adjusted for price effects, Taiwan’s Q2 manufacturing production index climbed to 114.17, a 23% increase from last year, marking six straight quarters of expansion.

Looking ahead, the ministry warned that trade protectionism and geopolitical tensions will weigh on global growth. Still, it said Taiwan’s strengths in semiconductors, high-end server supply chains, and upcoming consumer electronics launches should sustain momentum in the second half of the year.