Asia’s Export Factories End 2025 Strong as Orders Rise

S&P Global’s December purchasing managers’ indexes showed Asia’s export-oriented factories finishing 2025 on firmer footing, with new orders and product cycles providing a late-year lift to activity. Taiwan’s manufacturing PMI rose to 50.9 in December from 48.8 in November, its first reading above the 50-point growth threshold in 10 months, while other major tech exporters saw factory activity reverse recent declines. China recorded an unexpected turnaround as a pre-holiday surge in orders nudged factories back toward expansion, and most Southeast Asian producers maintained brisk growth.

The regional improvement reflected a mix of demand-side and industry-specific drivers. S&P Global Market Intelligence economists highlighted new product launches and improved external demand as a common theme. “According to manufacturers, new product launches and improved external demand drove the improvement in sales, while confidence in the outlook also improved markedly in December to reach its highest level since May 2022,” said Usamah Bhatti, economist at S&P Global Market Intelligence. In Taiwan, sentiment strengthened alongside output gains. “Taiwan’s manufacturing sector ended 2025 on a high, with firms signalling fresh increases in production and overall new business amid reports of firmer demand conditions,” said Annabel Fiddes, Economics Associate Director at S&P Global Market Intelligence.

The pickup had notable sectoral contours. Several firms pointed to stronger orders for artificial-intelligence-related hardware and components, a development consistent with a global demand shift toward semiconductors and data-center equipment. For major exporters such as South Korea and Taiwan, which are deeply integrated into global tech supply chains, that demand helped snap months of contraction and lifted capacity utilization in late December.

S&P Global’s commentary also flagged behavioral changes consistent with an incipient recovery. Manufacturers reported inventory building, higher purchasing activity and rising employment. These shifts suggest firms were repositioning supply chains and stocking ahead of expected demand in 2026, which could translate into stronger industrial production and export volumes in the first quarter.

Policy and market implications are mixed. A sustained upswing would support regional trade, corporate earnings in technology and parts suppliers, and could tilt central-bank assessments of growth risks in economies where manufacturing is a key job engine. Yet analysts cautioned the signals are preliminary. The PMI series is a private-sector survey capturing activity and sentiment; confirmation will require national industrial output and trade statistics, and it remains too early to determine whether long-run shifts in trade flows, including tariff effects, are driving structural change.

For investors and policymakers, the key near-term indicators to watch are national factory output reports, semiconductor shipment data and quarterly trade figures. If new orders translate into durable production growth, Asia’s manufacturing rebound could underpin broader regional growth in 2026. If the gains prove cyclical or concentrated in a few tech segments, the recovery may be more muted.