Taiwan's Industrial Production Rises Nearly 4% in March 2024, Driven by AI and High-Performance Computing

Taiwan's industrial production increased by nearly 4% year-on-year in March 2024, largely driven by growth in AI applications and high-performance computing devices, according to the Ministry of Economic Affairs. The growth was fueled by increased demand for microprocessors and memory chips used in AI applications.

While Taiwan leads global semiconductor manufacturing, microprocessors and memory chips constitute only a small part of its overall production. In contrast, South Korea is highly specialized in these advanced microchips. Rising geopolitical tensions and efforts to counterbalance China's market share may impact Taiwan and South Korea, but also present opportunities for Southeast Asian economies to attract investments from semiconductor manufacturers seeking to diversify their production bases.

Taiwan Semiconductor Manufacturing Co (TSMC) announced that a new chip manufacturing technology called 'A16' will enter production in the second half of 2026, setting up a showdown with rival Intel over who can make the world's fastest chips. TSMC said that AI chip firms are likely to be the first adopters of the A16 technology due to the demand for optimized performance. The company also revealed a new technology for supplying power to computer chips from the backside, which helps speed up AI chips and will be available in 2026.

Why this matters: The growth in Taiwan's industrial production, driven by AI and high-performance computing, highlights the increasing importance of these technologies in the global economy. As competition intensifies between major semiconductor manufacturers like TSMC and Intel, the race to develop faster and more advanced chips could have significant implications for various industries relying on these technologies.

Analysts said these announcements call into question Intel's claims that it will overtake TSMC in making the world's fastest computing chips. Kevin Zhang, TSMC's senior vice president of business development, stated that the company has developed the A16 process faster than expected due to demand from AI chip firms. The potential of generative AI is considered 'infinite' with a wide range of market value predictions, from $200 billion to $7 trillion, as it enables more processing power and various applications.

Key Takeaways

• Taiwan's industrial production grew 4% in March 2024, driven by AI and high-performance computing.
• Taiwan leads in semiconductor manufacturing, but South Korea dominates advanced microchips.
• TSMC to start production of 'A16' chip tech in 2026, challenging Intel's chip supremacy.
• AI chip firms likely to be first adopters of TSMC's A16 tech due to demand for performance.
• Generative AI's market value predicted from $200B to $7T, driving demand for processing power.