Taiwan's factories are running hot on AI demand — good news for chipmakers, investors, and the Taiwanese economy, though the boom may be near its peak.

• A key health gauge for Taiwan's manufacturers hit "red" in July for the first time since 2021, meaning booming or even overheating activity.
• Chip and electronics makers are driving it, riding strong AI demand and customers stocking up before new gadgets launch later this year.
• The boom is spreading to older industries too, as machinery and plastics firms pick up work from chip companies expanding their factories.
• Nearly half of manufacturers surveyed said their own business was in "red" territory, up sharply from June.

Outlook: The reading only just crossed into red, and matching last year's strong numbers gets harder from here, so the streak may not last through the rest of the year.