Taiwan's factories are booming on AI demand, good news for chipmakers and the global tech supply chain, though rising chip prices could bite consumers.

• Taiwan's factory activity grew for the 11th month straight and hit its strongest reading since 2021.
• The driver is worldwide demand for AI servers, high-end memory chips, and fast optical networking gear.
• New orders, production, and hiring all jumped, and companies expect the good times to last another six months.
• Tight supplies of raw materials are slowing deliveries and pushing up costs, creating bottlenecks.
• Memory chip prices are rising, making PCs and phones more expensive, which could eventually cool demand.
• Taiwan's service sector slowed as stock market swings made investors cautious, but it is still growing.

Outlook: The AI-driven export boom looks set to continue into year-end, with the main risk being whether higher gadget prices start scaring off buyers.