The robust demand stemming from AI device applications and related semiconductor demand will bring Taiwan's GDP to a record high in 2024, according to industry observers.
Taiwan's AI and semiconductor supply chains are expected to run in top gear in the fourth quarter of 2024 supporting production for various AI applications, including servers, handsets, and PCs, said the observers.
Government institutions now expect such strong growths of these industry sectors to help boost Taiwan's 2024 GDP to exceed NT$25 trillion (US$779.13 billion), the observers said.
The Taiwan Institute of Economic Research (TIER) noted on October 3 that international demand for high-performance computing (HPC) and AI applications has been strong. In August 2024, the electronic components industry sector recorded a "yellow-red" light – a strong showing in Taiwan's five-color system gauging economic conditions – for the third month straight.
For PC, electronic devices, and optical products manufacturing, strong demand from the AI and cloud computing sectors and from major brand vendors replenishing inventory drove growths for servers, mobile device-use lenses, and others. These sectors saw "red" light – the best performance in the five-color system – in August for the second month in a row.
The Taiwan government's Directorate-General of Budget, Accounting and Statistics (DGBAS) released on August 16 an economic outlook for the country, indicating that the AI boom will drive Taiwan's exports of electronic components, IT and communications products. It predicts that Taiwan's GDP for 2024 will break the NT$25 trillion mark, achieving an economic growth of 3.90%, compared to 1.28% for 2023. DGBAS also predicts Taiwan's economic growth at 3.26% in 2025.
Robust manufacturing sector to sustain growth
Customs statistics show that electronic components, IT, communications, and audio-visual products now account for 64.2% of all exports from Taiwan, the highest in almost 10 years. As these product segments make up the bulk of Taiwan's exports, their strong shipments will more than offset declines in other exports, such as petrochemical and steel products.
The manufacturing sector's contribution to Taiwan's GDP already exceeded 30% in 2014, as a result of the strong IT and semiconductor industries.
In the first half of 2024, Taiwan's manufacturing sector created NT$9.23 trillion in output, rising 9.32% year-on-year and ending five quarters of negative growth since the fourth quarter of 2022. The IT sector saw the highest growth of all sectors with 22.37%. Other conventional industry sectors, such as machinery and chemicals, achieved less than 4% annual growth.
The government has unveiled a national development plan for 2025-2028, allocating a NT$22 billion budget to help boost the semiconductor, AI, military, industrial, security, and next-generation communications sectors.
Article translated by Rodney Chan
