TAIPEI (Taiwan News) — Taiwan’s March electricity-based economic indicator remained in the “red” hot zone despite the ongoing Middle East conflict, Taiwan Research Institute said Wednesday.

TRI said global tensions have pushed up energy prices and increased supply chain uncertainty, per CNA. However, it said Taiwan continues to benefit from strong AI-driven capital spending by major cloud service providers, per UDN.

The institute said chip, computer, and electronics industries remain the main performance drivers. It said spillover effects are also lifting demand in related sectors.

Supported by AI demand, industrial electricity consumption at high-voltage levels rose 1.76% year-on-year in March. TRI forecast March economic growth at 11.4%, maintaining a high-growth trend.

The institute said semiconductor demand, especially in advanced processes and packaging, remains strong, with capacity utilization tight. Companies are continuing to expand capital spending, and operations have so far shown resilience despite geopolitical risks.

TRI said machinery and plastics industries also benefited from demand linked to semiconductor equipment, servers, and data center construction. Rising raw material prices tied to Middle East tensions also supported industrial electricity use, while declines in chemical materials and steel sectors narrowed.

The institute said traditional industries are recovering after a weak year. It said the global steel market is in a mild rebound, with higher input costs pushing the sector’s indicator from “blue” to “yellow-blue,” signaling improvement.

The textile sector remains weak due to oversupply in China and price competition, but the institute said some firms are shifting toward higher-value products such as fiberglass fabrics and semiconductor-related materials for AI applications.

TRI said Taiwan’s role in semiconductor and AI supply chains continues to provide a buffer against external shocks, helping exports and overall economic performance remain stronger than many peers.