Manufacturing activity across Asia remained in expansion territory in October, but growth slowed in economies closely tied to the artificial-intelligence chip trade. South Korea’s S&P Global manufacturing PMI fell to 51.3 from 53.9 in September, an eight-month low, while Japan’s reading dropped to 53.3, a seven-month low. Taiwan’s PMI declined to 54.9 from 56.7, although it continued to show solid growth. China diverged, with its official manufacturing PMI slipping to 49.3, indicating contraction. In South Korea, output rose at its weakest pace in 10 months and new orders grew at their slowest rate in four months; international sales benefited from Asia-Pacific demand, while U.S. demand remained relatively subdued. The slowdown has raised questions about the durability and profitability of the AI boom, amid concerns over softer semiconductor demand and inflation-related price pressures. The IMF’s October 2026 Regional Economic Outlook for Asia and the Pacific forecasts regional growth will ease from 5.0% in 2025 to 4.8% in 2026 and 4.4% in 2027. It identified a potential correction in AI-driven demand, geopolitical tensions affecting energy prices and higher global yields as key risks. A hypothetical sharp AI-demand correction could leave Asia’s output about 1.7% below baseline, with technology supply chains bearing the impact. The Bank of Korea estimates that weaker AI-related capital spending could cut South Korean semiconductor exports by $50 billion to $100 billion and reduce 2027 GDP growth by 0.4 percentage points. IMF analysis of about 40 million job postings also found demand for AI-exposed occupations has fallen by nearly 10% since ChatGPT launched in November 2022.