July 1, 2026, (Inside AI) — The global artificial intelligence boom propelled Asia's manufacturing sector in June, as robust demand for technology-related goods helped offset economic drag from the Iran conflict. Private surveys released Wednesday show factory activity expanding across key economies, offering a critical buffer for export-reliant nations.
China, Japan, and South Korea all reported growth, driven by chips, computers, and AI-related products. Companies also stockpiled to guard against shortages and price rises tied to Middle East disruptions. Yet price pressures remain elevated, with supply shortages and shipping delays lengthening lead times, signaling potential energy shock intensification.
China's RatingDog General Manufacturing Purchasing Managers' Index (PMI) hit 51.7 in June, expanding for a seventh straight month and staying above the 50-mark separating growth from contraction. It eased from 51.8 in May but beat analysts' forecast of 51.6.
Yao Yu, founder at RatingDog, said on China's PMI:
"Overall, the manufacturing sector maintained a steady expansion in June, supported by sustained new order growth, easing cost pressures and improved labour market conditions."
An official survey Tuesday also showed China's factory activity returning to expansion on robust export orders. Japan's PMI rose to 54.8 in June from 54.5, marking a sixth consecutive month of growth. New orders expanded at their fastest pace in more than two years.
But input cost inflation stayed at a nearly four-year high, threatening corporate margins and broader inflation. South Korea's factory activity expanded for a seventh month, though at a slower pace than May due to falling export demand.
Usamah Bhatti, economist at S&P Global Market Intelligence, noted:
"Firms frequently reported that rising raw material prices, alongside difficulties sourcing and receiving inputs due to delays and shortages, weighed on sector performance."
Most Asian emerging economies also saw expansion. The Philippines' index held steady at 50.9 from 50.8 in May, while Malaysia's rose to 50.7 from 49.9. Taiwan and Vietnam also reported factory growth in June.
The surveys highlight how AI investment is reshaping Asia's economic fortunes. Booming demand for chips, data-center equipment, and other tech goods provides a powerful growth engine, buffering against geopolitical and trade risks. However, the Iran war's energy shock could intensify across the region in coming months, adding uncertainty to the outlook.
