On October 7, reports surfaced indicating that the Reuters Tankan survey revealed a significant uptick in confidence among Japan’s large manufacturers in October, reaching its highest point in nearly five years. This surge was fueled by robust demand for chips. Conversely, confidence in the non-manufacturing sector plummeted due to escalating costs. The business sentiment index for manufacturers climbed from 21 points in September to 22 points, marking the highest level since December 2021. A manager from a precision machinery firm observed that the semiconductor industry is currently enjoying strong momentum, with order volumes consistently running at 1.5 times the normal rate over the past four months. Another respondent, from a machinery company, reported that orders and shipments for products tailored to the semiconductor market remain strong. However, the business sentiment index for non-manufacturers dropped from 29 points to 23 points, hitting its lowest level since November 2024. Despite these trends, some manufacturers cautioned that the robust demand associated with AI might wane, while service sector companies voiced concerns that inflation is undermining household purchasing power.