Business confidence in Taiwan's manufacturing sector improved in May to its highest level since March 2025, according to a Taipei Times report on Tuesday, citing data from the Taiwan Institute of Economic Research (TIER).

The manufacturing composite index rose to 15.75 in May from 14.03 in April, the TIER report said.

According to TIER's analysis, the improvement in the manufacturing sector was driven by strong global demand for semiconductors, electronic components, and other products linked to artificial intelligence. The thawing of tensions in the Middle East and softening of oil prices also helped improve business sentiment.

At 15.75, the index is still in the "green" range, indicating stable conditions, but close to the threshold for a "yellow-red" reading, which hints at warming growth, it said.

For the future, TIER said uncertainty over global trade policies and geopolitical developments remains; however, continued investment in AI infrastructure is expected to support Taiwan's manufacturing sector.