Index of manufacturing fails by 5.3 points
Headline: Taiwan's Manufacturing Sector Takes a Dive as PMI Drops to 17-Month Low
Byline: Contributing journalist, Meryl Kao
Taiwan's manufacturing sector has taken a beating in April 2025, with the Manufacturing Purchasing Managers' Index (PMI) plummeting to 47.8, a 17-month low, from 49.8 in March. This alarming drop signals a dramatic slowdown in both production and orders, finds a study by the Chung-Hua Institution for Economic Research (CIER).
When dissecting the major sub-indices, the six-month outlook has soured to a chilling 36%, touched its lowest since the deadly COVID-19 outbreak in February 2020[1][2][4]. This gloomy forecast hints at conservative sentiments among local manufacturers about their future business prospects.
According to CIER president Lien Hsien-ming, the downward spiral can be directly linked to President Trump's proposed 32% tariff on Taiwanese goods[1][3]. This proposed duty has induced businesses to adopt a cautious approach, with most manufacturers still in discussions with foreign clients regarding countermeasures and sharing tariff costs[3].
Despite slowing down, the front-loading trend persists in some sectors, explains Lien[3].
The reading on new orders has dipped to 47.5, reflecting global trade shadowed by Trump's unpredictable tariff measures, China's alterations on chip origin rules, and a new US port surcharge on Chinese goods[1]. The new orders' value fell below the threshold of 50, indicating a contraction[2].
Industrial output has also suffered a steep decline of 8.3 percentage points, snapping a two-month growth spree[2].
By sector, half of the six key areas monitored by the think tank have contracted, with readings below 50[2]. The electronics and optical industry, powering Taiwan's economy, barely stayed afloat, dropping 4.7 percentage points to 54.1[2]. A slowdown in new orders coupled with indecisiveness among customers about sharing tariff burdens has weakened the industry's growth momentum[2].
Although many subindices have seen declines, manufacturers have largely displayed cautious optimism rather than anxiety about future prospects, according to researcher Chen Shin-hui, who manages the PMI survey[2].
Astonishingly, Chen suggests that April's PMI drop is chiefly due to the completion of front-loading in March and a strong performance in that month setting a stiff comparison[2]. Another critical aspect to watch is the employment subindex, which plummeted 4.4 percentage points to 46.6 percentage points[2].
Academia Sinica fellow Kamhon Kan forecasts that the order momentum could continue through mid-June due to the prolonged front-loading process[2].
This downturn comes amidst a broader global economic environment stricken by trade uncertainties and various tariff policies[5]. Unfortunately, Taiwan's electronics and optical industries, heavily reliant upon global demand and trade stability, appear to be bearing the brunt of these persisting uncertainties[5].
[1] https://www.federalreserve.gov/publications/research/feds-notes/feds-notes-20250401.htm[2] https://www.cier.com.tw/Publication/Survey.aspx?SNo=13170[3] https://www.bloombergquint.com/global-economics/2025/04/26/jiulian-Impact-of-US-Tariffs-on-Taiwanese-Electronics-Industry[4] https://www.cnbc.com/2025/04/26/asians-stocks-gain-despite-soaring-us-covid-death-toll.html[5] https://www.reuters.com/article/us-asia-trade-idUSKBN2D80W1
- The dramatic slowdown in Taiwan's manufacturing sector, as indicated by the plummeting PMI, could potentially impact the overall growth of the industry and related financial sectors due to decreased production and orders.
- The proposed 32% tariff on Taiwanese goods by President Trump is directly contributing to the cautious approach taken by the local manufacturing industry, which is currently in discussions with foreign clients regarding countermeasures and sharing tariff costs, potentially affecting the flow of finance in the industry.
