New orders, industrial output and exports are all rising together, and the spending behind them is no longer showing up only in chip sales.
New orders at Japan's factories grew at their fastest rate since January 2018, on S&P Global's flash manufacturing survey, which put the headline index at 55.1 in August against 54.5 a month earlier. The pull came from large overseas AI customers: foundries, chip manufacturers and operators of data centres.
Branch managers taking part in the Bank of Japan's July regional survey reported that, with AI spending around the world still expanding, they have seen more orders for machinery used to make semiconductors and electronic parts. That demand is beginning to reach beyond chipmaking gear.
Revised figures published on August 17 by Japan's trade and industry ministry put the seasonally adjusted index of industrial production at 104.6 for June, 1.9% above the May level and 4.9% higher than a year earlier. The factory operating ratio, a gauge of how much production work plants are actually carrying out, rose 4.1% on the month.
Buying for AI data centres helped push Japan's July exports up 23.2% from a year earlier to a record 11.5 trillion yen, Reuters reported, ahead of a forecast 19.9% gain and faster than June's 19.3% advance; a soft yen, which gave Japanese goods an edge abroad, added to the total. Shipments to the United States rose 22%, and those to China 25.8%.
Imports rose faster still, up 27.8% to a record 12.1 trillion yen, largely because oil cost more, and the gap between the two flows left Japan with a trade deficit of 634.5 billion yen. The same regional survey found smaller businesses still struggling to pass their higher input prices on to customers, while Japan's producer prices in July stood 7.2% above a year earlier — enough pressure that the central bank may raise interest rates as soon as September.
The buying started with the machines that make chips. It has since reached power-generation machinery and telecommunications gear, and then the moulds used to shape ordinary industrial parts — each step further from anything recognisably about AI.