Global AI boom fuels Asia factory expansion in August

Asia's factories experienced a surge in activity in August, driven by strong demand for AI-related products, according to private surveys released on Tuesday. The trend was observed in China, Japan, and South Korea, despite ongoing geopolitical tensions and rising costs due to the Middle East war. China's Manufacturing PMI rose to 51.5 in August from 50.9 in July, indicating growth and surpassing analysts' expectations.

Japan's manufacturing sector also showed momentum, with the PMI reaching 54.9 in August, marking eight consecutive months of expansion. South Korea followed suit, with its PMI increasing to 52.3 in August, remaining above the threshold for expansion for a ninth consecutive month. The expansion was primarily fueled by robust export demand, with exports in South Korea rising by 68.7% in August compared to the previous year.

Taiwan, Malaysia, and the Philippines also witnessed factory activity growth in August, with their PMIs standing at 54.7, 50.2, and 54.9, respectively. Meanwhile, Indonesia's PMI dipped into contraction territory at 49.8. Annabel Fiddes, an economics associate director at S&P Global Market Intelligence, noted that the AI and semiconductor supercycle continues to benefit firms, bolstering export demand in Asia.