Taiwan's Economy: A Mix of Growth and Challenges in Q1 2025
- By Chen Cheng-hui / Staff reporter
Industry demonstrates significant power usage: research institution
Taiwan's economic activity last month exhibited a complex picture, with support from inventory replenishment demand and rush orders due to looming tariffs. A survey by the Taiwan Research Institute (台灣綜合研究院) showed that the economic activity continued to trend upward, indicating a robust 11-month streak.
The Electricity Prosperity Index (EPI), although not directly mentioned in the statement, can be inferred to show a "yellow-red" light, signifying steady growth. The surveying institute, based in New Taipei City, shared this insight in a recent release.
Since U.S. President Donald Trump took office, he has imposed a string of tariffs, including the controversial "reciprocal" tariffs on trading partners, prompting global companies to expedite inventory build-up before the tariffs took effect.
The tech-heavy Taiwanese economy appears to be flourishing, particularly within the semiconductor and electronics industries. These sectors have benefited from the AI boom, fueling increased production and materializing in rush orders since early March. This surge in demand has spurred manufacturing activity to peak capacity, favorably impacting the nation's economic growth.
Predicting that Taiwan's economy likely expanded 3% year-on-year last month and 3.1% in the first quarter, the institute used the EPI to gauge the health of the nation's manufacturing and service sectors.
Examining electrical consumption patterns, the survey revealed a 1.49% increase in high-voltage power demand year-on-year. Breaking this down, the manufacturing sector saw a 1.69% rise in electricity usage, while the service sector grew just 0.37%.
Among specific sectors, semiconductor firms experienced a 9.46% surge in demand due to AI and high-performance computing applications, with suppliers of computers, electronic goods, and optical products reporting an even steeper 10.87% consumer power consumption increase. This energetic demand in the global AI server market is expected to persist well into the future.
Conversely, chemical material producers suffered a 3.22% power consumption decline due to intensified competition from foreign peers and global overcapacity. Similarly, suppliers of steel products faced challenges in light of US tariffs, competitive pricing initiatives from Chinese and Southeast Asian competitors, and slumping electricity use by 8% compared to the same period last year.
The study underscores Taiwan's strategic position in the global technology supply chain and the risks associated with U.S. tariff policy. Despite temporary mitigation via rush orders, the ongoing uncertainty of protectionist measures calls for ongoing monitoring and adaptation.
While the latest survey does not offer explicit quantification of electricity demand or the EPI, inferences can be drawn from the emerging trends in both manufacturing and green energy investments. This suggests a growth trajectory for industrial power demand, counterbalanced by challenges faced by the service sector, particularly due to relaxed consumer spending post-Lunar New Year.
- The economic activity in Taiwan, despite the looming tariffs, showed a thriving trend, indicating a robust 11-month streak, with a surge in demand particularly within the semiconductor and electronics industries.
- Conversely, sectors like chemical material producers and steel products suppliers faced challenges, with the latter experiencing a 8% drop in electricity use due to US tariffs and competitive pressures from foreign peers.
- The Electricity Prosperity Index (EPI) is inferred to show steady growth, but a "yellow-red" light, indicating that both manufacturing and service sectors are growing but with certain challenges.
- Taiwan's strategic position in the global technology supply chain is highlighted, underlining the risks associated with U.S. tariff policy and the need for ongoing monitoring and adaptation.
