Taiwan

Intelligence for Better Decision Making

March Industrial Production Surges on Robust AI and Semiconductor Demand

April 25, 2025 | Indirect Indicator

Industrial production in March 2025 accelerated, underpinned by surging demand for semiconductors and AI technologies.

**The Industrial Production Index for March reached 106.10, up 13.65% year-on-year and marking a thirteenth consecutive month of growth.**
The Manufacturing Production Index climbed to 106.89, a 14.71% year-on-year rise and its highest level to date. Over the first quarter, the Industrial Production Index averaged 98.30, an 11.95% increase from a year earlier, while the Manufacturing Production Index averaged 98.77, up 12.79% and extending a five-quarter growth streak.

**Forecasts for April’s Manufacturing Production Index range from 100.24 to 104.24, suggesting a year-on-year gain between 14.4% and 19.0%.**
These projections reflect ongoing strength in electronics and semiconductors amid global economic uncertainty and evolving trade policies.

**Surging demand for artificial intelligence technologies and high-performance computing drove much of the expansion.**
Companies accelerated cloud-service orders to hedge against new US tariff measures, and officials at the Ministry of Economic Affairs pointed to AI-related products as the core stimulus.

**In the information electronics sector, electronic components production jumped 25.07% year-on-year, led by a 29.49% rise in integrated circuits and a 49.5% increase in panel components.**
The machinery and equipment industry grew 7.57%, fueled by ongoing semiconductor capacity additions. Basic metals output fell 4.78%, chemical materials declined 3.94%, and automotive parts dropped 10.82% due to component shortages and reduced orders.

**Continued momentum in AI device and high-tech server production is likely to drive further advances in advanced semiconductors, even as shifts in US trade policy and rising geopolitical tensions introduce uncertainty into global supply chains and demand patterns.**

Escalation and Market Impact of the US-China Tariff Standoff: Taiwan's Take

April 25, 2025 | Indirect Indicator

The escalation of reciprocal tariffs between the United States and China has profoundly disrupted bilateral trade, financial markets, and economic policies.

The United States and China have imposed reciprocal tariffs that now reach up to 245 percent on Chinese imports and 125 percent on US goods, effectively halting bilateral trade. Xie Jinhe, chairman of Caixin Media, describes the tariff rates as a critical turning point, arguing that raising them further would yield diminishing returns. He also notes that President Trump’s initial rationale—that tariffs would boost federal revenue—has been compromised by the broader economic fallout.

**Since the tariffs took effect, US equity markets have shed roughly $18 trillion in value, far exceeding any potential gains from tariff revenues.**
Because a large share of American household wealth is invested in stocks, this decline has fueled public discontent with administration policies. In China, lower household exposure to equities helped dampen the market response to the new duties. President Trump has publicly urged Federal Reserve Chair Jerome Powell to lower interest rates in response to market losses, although analysts warn that rate cuts alone cannot offset the wider impact of the trade standoff.

**Economists warn that prolonged tariff pressures could weaken the key pillars of US economic dominance—the dollar, equities, and government bonds—by disrupting trade links and altering patterns of debt issuance.**
To ease tensions, the administration has granted a 90-day exemption on certain tariffs for 75 countries, offering temporary relief and an opportunity to realign strategic partnerships. Taiwan, a crucial node in US manufacturing supply chains, received specific mention from Xie Jinhe as a partner whose inclusion or exclusion could shape broader industrial strategies.

**Senior US officials have proposed reducing existing tariffs, currently ranging from 145 percent to 245 percent, to a band of 50 percent to 65 percent.**
One idea under discussion calls for a tiered structure that would vary duties based on national-security considerations. Beijing has indicated its readiness to negotiate if the United States rescinds its threats. White House spokespeople stress that any changes will come directly from the president, and no unilateral tariff removals are on the table at present.

**Markets have reacted favorably to indications of a possible rollback.**
Major US stock indices recorded consecutive gains, and Taiwan’s weighted index jumped 4.5 percent—its second-largest single-day advance this year—driven by heavy buying of semiconductor firms such as TSMC. Despite the surge, trading volumes in Taiwan remained below 300 billion yuan, signaling lingering investor caution. Technology and electronics companies with strong earnings forecasts attracted the most interest amid expectations of continued volatility.

**Analysts have drawn parallels between the current dispute and the protectionist measures of the Smoot-Hawley Tariff Act of 1930.**
Economist Jeremy Siegel characterizes the administration’s strategy as one of the most significant policy errors in nearly a century. JPMorgan Chase projects that US duties could raise the Consumer Price Index by 1.5 percent to 2 percent, increasing costs for everyday goods, while Yale University estimates that tariff-induced price hikes could cost low-income American households up to $3,800 per year.

**With US debt exceeding $36 trillion and $1.2 trillion in interest obligations due in 2025, retaliatory actions have included sizable sales of US Treasuries, notably China’s $20 billion disposal in early April.**
Such moves risk undermining confidence in US credit and triggering exchange-rate volatility. In response, China has expanded economic ties with ASEAN and the European Union, promoting the use of the renminbi in cross-border trade to lessen its reliance on the dollar.

**The United States, now the world’s largest liquefied natural gas exporter, has struggled to use LNG sales to narrow its trade deficit.**
Export capacity remains limited by infrastructure constraints, while tariff tensions have reduced demand in Asia, as evidenced by China’s suspension of US LNG imports in March. European efforts to diversify away from Russian gas have provided a temporary boost in LNG purchases, but longer-term factors—such as potential shifts in climate policy and the eventual return of Russian gas—cast doubt on sustained gains. As a result, LNG exports are unlikely to significantly rebalance US-China trade flows.

Monitored Intelligence for Taiwan - April 25, 2025

News
Media
600

Government
Releases
49

City/State
Releases
75

Embassy
Releases
6

Foreign
Service
Advisories
0

Academic/
Think
Tank
2

Podcasts
0

Videos
0

Social
Media
0

Business
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8

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政院通過4100億預算特別條例！卓榮泰揭分配：產業提升至930億

The Executive Yuan passed a special regulation for a 410 billion budget! Zhuo Rongtai reveals distribution: industry increased to 93 billion

The China Post | Local Language | News | April 25, 2025 | UndeterminedBudgets-Budgeting

The Executive Yuan approved the "Special Act to Strengthen Economic, Social and National Security Resilience in Response to International Situations," allocating a budget of NT$410 billion. Premier Toh Jung-tai detailed that this budget comprises NT$150 billion for national security resilience, NT$167 billion for social support, and an increase in industrial support from NT$88 billion to NT$93 billion.

Zhuo Rongtai explained that the impetus for this industrial support plan arose following the United States' announcement of reciprocal tariffs. Despite the U.S. suspending additional tariffs, a 10% basic tariff still applies to many Taiwanese industries. The government has engaged in over ten industry seminars to gauge the impact and response of various sectors. The special draft bill is rooted in four key principles: industrial support, stable employment, enhanced resilience, and care for people's livelihoods.

Key projects within the budget aim to provide financial aid to businesses, strengthen competitiveness, assist firms in diversifying markets, support workers, and improve financial support in agriculture and education. The budget adjustments were made due to the tariffs' impacts, leading to a comprehensive special regulations proposal that emphasizes national health, labor insurance, and educational talent cultivation. Zhuo highlighted the significance of collaboration with Congress once the budget is approved to mitigate economic disruptions.

CNBC：前往洛杉磯的中國貨船運輸量劇降27％！

CNBC: Chinese cargo ship traffic to Los Angeles dropped 27%!

Liberty Times Net | Local Language | News | April 25, 2025 | Supply Chain Issues

Container ship traffic from China to the ports of Los Angeles and Long Beach has experienced a significant decline, with a 27% drop reported for the week ending May 3. This decrease is attributed to several factors, including high tariffs imposed by President Trump on Chinese goods and growing concerns about a potential economic recession. The data reflects an ongoing trend in reduced trade between the United States and China.

The Twin Alliance, led by Maersk, reported the highest cancellation rate of cargo shipments at 24.39%, while the Ocean Alliance, comprising CMA CGM and Evergreen Marine, followed with an 18% cancellation rate. According to ship tracking system Port Optimizer, the number of cargo ships departing from China for Southern California was down by 29% week-on-week, with a staggering 44% decline in scheduled arrivals for the week of May 4 to 10 compared to the previous year. This equates to only 12 vessels scheduled to arrive, a sharp decline from 22 vessels in the week ending April 20.

The overall container volume also saw a significant decrease, with 62,568 TEUs arriving in the week of May 4-10, compared to 120,608 TEUs the previous week. Ken Adamo, chief analytics officer at DAT Freight & Analytics, noted a dramatic decline in the number of trucks operating nationwide, with over 700,000 trucks reportedly disappearing in the last week. This reduction in shipping activity coincides with increased cancellations by ocean carriers on key Pacific routes to several major ports, illustrating the ongoing challenges faced in the shipping and logistics sectors amidst rising tariffs and trade tensions. Overall, 80 voyages departing from China have been canceled due to diminished demand, further highlighting the impact of these economic factors.

Power consumption shows strong industry: institute

Taipei Times | English | News | April 25, 2025 | UndeterminedEconomic Growth

Taiwan's economic activity showed positive momentum last month, fueled by inventory replenishment and urgency to fulfill orders before new US tariffs take effect, as reported by the Taiwan Research Institute. The Electricity Prosperity Index (EPI) increased by 0.15 percent year-on-year, with overall electricity consumption reflecting a consistent economic upturn for the 11th consecutive month. Manufacturing electricity demand rose by 1.69 percent, while the service sector saw a smaller increase of 0.37 percent, leading to an overall rise of 1.49 percent in electricity consumption.

The semiconductor and electronics industries have significantly benefitted from the surge in artificial intelligence (AI) development. The combination of high demand and rush orders since early March has pushed production lines to near full capacity, contributing to an estimated 3 percent year-on-year economic growth last month and 3.1 percent for the first quarter. High-voltage power usage increased by 1.49 percent overall, with semiconductor firms' consumption jumping 9.46 percent due to strong AI demand, while consumption from electronics and optical product suppliers rose by 10.87 percent.

In contrast, chemical material producers experienced a decline of 3.22 percent in power consumption due to increased global competition and overcapacity. Additionally, suppliers of steel products faced challenges from US tariffs and competitive pricing pressures from Chinese and Southeast Asian rivals, resulting in an 8 percent decrease in electricity use. The arrival of rush orders emphasizes Taiwan's crucial role in the global technology supply chain, but it also underscores the risks associated with the uncertainty of US tariff policies, indicating a need for ongoing vigilance.

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