Following a record-setting year for the semiconductor industry, the start of the new year has continued the momentum, as semiconductor revenue grew 27% in 1Q26 from 4Q25 to reach $319bn, according to new research form Omdia. Memory revenue drove the increase, rising over 80% sequentially in 1Q26 from 4Q25.

Since Omdia began tracking the semiconductor market at a quarterly level in1Q02, this 27% quarter-over-quarter (QoQ) growth is the highest observed. The market has now experienced three consecutive quarters of double-digit revenue growth, with 2Q26 expected to continue this pattern. This puts semiconductor revenue on track to surpass $700bn in 1H26. AI-related demand remains strong, while memory supply/demand imbalances continue to be among the leading trends in the semiconductor market.

Memory market reaches another new high
Dynamic random-access memory (DRAM) and NAND flash memory (NAND) revenue continued strong growth, nearly doubling in revenue in one quarter. Strong AI demand has affected both the DRAM and NAND markets as average selling prices (ASPs) have risen sharply. The result is that these two components accounted for over 40% of all semiconductor revenue in 1Q26, much greater than the long-term average of around 20% revenue share.

Within the memory market, NAND was a particularly strong contributor to growth. NAND revenue reached just under $48bn in 1Q26, rising 96% QoQ as pricing increased across the market. NAND ASPs increased 95% sequentially, driven by sustained AI and data center demand alongside ongoing supply constraints. With utilization remaining high and supply recovery limited by technology transitions, yield learning, and product mix challenges, NAND market momentum is expected to continue through 2Q26, supporting further revenue growth and price increases.

Outside of memory, growth is more consistent with historical patterns
While the memory market has broken from historical patterns, that is not the case for the rest of the semiconductor market. Removing memory IC revenue shows that the 1Q26 semiconductor market grew, but much more modestly. Non-memory semiconductor revenue grew just over 2% QoQ in 1Q26. Historically, revenue for both the overall semiconductor market and the non-memory portion declines in Q1 by approximately 4%. Some components performed at typical seasonal rates; Microcontrollers (MCUs), discretes, and optical markets saw slight to mid-single digit QoQ declines for the first quarter of the year. However, other components, especially those in the AI and data center ecosystem, outperformed the typical decline in revenue in the first quarter. This gave the non-memory side of the semiconductor market modest growth.

Outlook
Strong growth is expected to continue in 2Q26 as memory revenue continues to drive the semiconductor market forward. Quarterly growth is expected to be lower than in the first quarter, but still enough to result in more than 20% sequential growth for the semiconductor market.

"Four consecutive quarters of double-digit revenue growth for the market show the strength of the current demand for semiconductors," said Clifford Leimbach, Practice Leader at Omdia. "This expected growth would bring 1H26 to over $700bn, well on track to surpass the $1tn threshold this year.