The global artificial intelligence boom is delivering a powerful boost to Asian manufacturing, with surging semiconductor demand helping South Korea record its fastest factory expansion in more than 15 years.
South Korea’s manufacturing Purchasing Managers’ Index rose to 53.9 in September, supported by strong overseas demand for semiconductors and automobiles.
A PMI reading above 50 indicates expansion.
Taiwan’s manufacturing PMI reached 56.7, while Japan remained in expansion territory for a tenth consecutive month with a reading of 54.1.
The figures demonstrate how the AI boom is spreading through the wider industrial economy.
AI Spending Flows Into Factories
Generative AI applications require enormous physical infrastructure.
Behind every chatbot or AI agent are processors, high-bandwidth memory chips, networking equipment, servers, cooling systems and data centres.
Demand for that equipment is generating business for companies throughout Asia’s technology manufacturing supply chain.
South Korea is particularly important because of its major semiconductor industry, including companies producing the advanced memory required by AI accelerators.
Taiwan similarly occupies a critical position in global semiconductor manufacturing.
Strong demand from AI data-centre operators has consequently translated into stronger orders for manufacturers.
Micron Results Reinforce Demand Story
Separately, strong earnings from US memory-chip manufacturer Micron Technology provided another indication that demand for AI-related memory remains robust.
Micron’s long-term supply commitments to Nvidia have increased to approximately $32 billion, according to Reuters.
The results helped lift technology shares across Asia, with Japan’s Nikkei rising more than 3 per cent and South Korea’s KOSPI gaining around 1.7 per cent during Thursday trading.
Energy Costs Remain a Risk
The outlook is not without challenges.
Manufacturers continue to face higher input costs, including energy-price pressures associated with geopolitical tensions.
Higher global borrowing costs could also eventually weigh on corporate investment.
For now, however, AI infrastructure spending is providing a powerful source of demand for some of Asia’s most important export economies.
The trend illustrates an increasingly important feature of the AI revolution: although the products may be digital, building the infrastructure behind them remains an enormous industrial undertaking.
