AI infrastructure drives the acceleration of electronic manufacturing, and engineering plastics and flame-retardant and weather resistant systems face new demands

The growth rate of electronic production is accelerating, and AI infrastructure has become the main driving force. According to an analysis released by Semiconductor Intelligence on October 22, the electronic production growth rate of major manufacturing economies will generally accelerate in 2026, with Taiwan expanding particularly rapidly due to the demand for AI infrastructure. The institution measures production using a three-month average year-on-year change to smooth out monthly fluctuations. Data shows that for most of 2026, Taiwan’s electronic output will increase by over 100% year-on-year. The consulting firm largely attributed this growth to NVIDIA’s AI modules: TSMC manufactures integrated circuits, which other Taiwanese companies assemble into modules. Other economies have also shown significant acceleration. Japan shifted from a year-on-year decrease of 1.5% in January to a growth of 17.6% in August; The 27 member states of the European Union saw a decrease of 10.5% in January and a growth of 16.9% in July; Electronic production in the United States increased by 8.1% in August according to the same caliber, continuing the acceleration trend that began in October 2025. The August data for other manufacturing economies in Asia shows that Thailand grew by 71%, Vietnam grew by 40%, Malaysia grew by 22%, South Korea grew by 18%, and China grew by 17%; India reached 14% in July. The institution also reminds that the growth rates of these countries should not be confused with the overall global growth estimates.

Consumer electronics are under pressure, and storage costs have risen significantly

The strong performance of the manufacturing industry is unevenly distributed.

. Semiconductor Intelligence cited IDC data stating that global PC shipments in the third quarter of 2026 decreased by approximately 20% year-on-year, while smartphone shipments decreased by 22%. The institution also pointed out that storage costs increased by 350% in the year ending in the third quarter, reflecting strong demand for DRAM and flash memory. IDC predicts that PC shipments will shrink by 11.3% in 2026, while Semiconductor Intelligence also cites data that smartphone shipments are expected to decline by 13.9%. Previously, eeNews Europe reported that the rise in mobile DRAM prices and component costs has forced mobile phone manufacturers to reconsider their production plans, especially for low-priced models. The broader production outlook remains positive. Atradius predicts in its August outlook for the electronics and ICT industry that global output will grow by 11% in 2026 and 7.3% in 2027. The global forecast covers a wider range of industries than the country specific production sequences analyzed by Semiconductor Intelligence.

Significance for the polymer additive industry

The structural differentiation of electronic manufacturing has put forward more segmented demands for upstream materials.

. The increasing volume of AI servers, modules, and high-speed interconnected devices drives the application of high heat resistance and high dimensional stability engineering plastics in connectors, sockets, packaging, and potting components; The requirements for flame retardant systems in such scenarios are not only to achieve flame retardant levels, but also to maintain stable electrical performance in long-term high temperature and electrified environments, which puts higher demands on the selection of flame retardants and the compatibility of antioxidants. At the same time, the demand for weather resistance and stability in outdoor and computer room environments also drives the collaborative design of antioxidant and light stabilization systems in engineering plastic formulations. On the other hand, the decline in PC and mobile phone shipments, as well as the increase in storage costs, may put pressure on the material demand of consumer electronics and exacerbate cost transmission pressure. For additive suppliers, this means a need to rebalance their product portfolio between high-value applications related to AI infrastructure and bulk applications in consumer electronics: the former places more emphasis on flame retardancy, weather stability, and reliability verification of electrical performance, while the latter focuses more on cost and supply stability. Overall, the increasing regional concentration of electronic production growth will also affect the regional layout and supporting pace of the supply chain for engineering plastics and additives.

Information source:Electronics production growth accelerates on AI demand， Organized by Herun Chemical.