Chips lift Japan's manufacturing sentiment to 5-month high

Aug 13, 2026, 03:42 pm

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Illustration featuring semiconductor chips and a Japanese flag. Business sentiment among Japanese manufacturers rose to a five-month high, buoyed by strong semiconductor-related demand. / Getty Images Bank

Business sentiment among Japanese manufacturers rose to its highest level in five months, buoyed by strong semiconductor-related demand. The Bank of Japan's official corporate survey similarly showed improved sentiment among large manufacturers, suggesting demand tied to semiconductors and AI is lifting certain segments of Japan's manufacturing sector.

According to Reuters' monthly Japan corporate survey released on the 13th, the manufacturing sentiment index for August came in at +18, up 5 points from +13 in July — the highest since March. The survey was conducted from the 29th of last month through the 6th of this month, covering 510 Japanese companies, of which 219 responded. The index is calculated by subtracting the percentage of companies reporting unfavorable conditions from those reporting favorable conditions, meaning a larger positive figure indicates more companies view the economy positively.

The improvement was led by semiconductor-related sectors. The chemical sector's sentiment index jumped from +23 in July to +33 in August, while metals and machinery rose from +12 to +25. One machinery maker surveyed said strong demand for semiconductor-related products is supporting order volumes. A precision machinery maker also reported that domestic and overseas orders have surged since April, reaching roughly double their usual level.

In contrast, the transport equipment sector, including automakers, held flat at 0. The non-manufacturing index improved from +25 to +28, with sentiment improving in wholesale, information services, and other service sectors. Companies expect the manufacturing sentiment index to fall to +16 by November, 2 points lower than the current reading.

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An image depicting a rising graph and arrows overlaid on a map of Japan. Business sentiment among Japanese manufacturers improved in August, with semiconductor-related sectors leading the gains. / Getty Images Bank

The Bank of Japan's official corporate survey also confirmed the improvement in manufacturing sentiment. In the June survey, released on July 1, the sentiment index for large manufacturers rose 5 points, from +17 in March to +22, while large non-manufacturers also rose from +36 to +37. However, the BOJ survey's September outlook for large manufacturers fell to +17, suggesting companies remain cautious about the road ahead.

Actual production data doesn't yet clearly confirm an upward trend. According to Japan's Ministry of Economy, Trade and Industry, mining and manufacturing output rose 0.5% in May from the previous month, marking a second consecutive month of growth, but of 15 sectors, 7 rose and 8 fell. The ministry maintained its overall assessment of production as "fluctuating between increases and decreases." Output of some electrical and information/communications equipment, including semiconductor and integrated circuit measurement devices, actually declined.

South Korea, meanwhile, has also continued to see strong semiconductor export growth. According to the Korea Customs Service, chip exports totaled $22.1 billion in the first 20 days of July, the highest for that period in July on record. Total chip exports in June also topped $40 billion for the first time, reaching $44.9 billion, marking 16 consecutive months of growth.

The improved sentiment among Japan's semiconductor materials and equipment makers and South Korea's rising chip exports are phenomena confirmed through separate sets of statistics. However, with Japanese companies anticipating a slight decline in sentiment going forward and the Japanese government not yet assessing overall industrial production as being in a clear recovery phase, additional data will be needed to determine whether the semiconductor upswing is spreading across manufacturing more broadly.

Choi Young-jae

#Chip #Japan #Export #AI