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By Nick Flaherty
Even with the most pessimistic forecast the semiconductor market is set to reach a trillion dollars this year.
The latest figures from the Semiconductor Industry Association (SIA) and forecasts from analysts Future Horizons and IDC put the value of the market at over $1tn. The most pessimistic scenario from Malcolm Penn at Future Horizons put the market at $901 billion in the highly unlikely event of a collapse in the market this quarter but all the other forecasts are over $1tn. His most optimistic forecast sees $1.6tn in 2026, a doubling of the market value in just one year.
This is on the back of global semiconductor sales of $298.5 billion during the first quarter of 2026, an increase of 25% compared to Q4 of 2025, which was unprecedented, said Penn.
“Global chip sales remain on track to reach $1 trillion in 2026, with Q1 sales significantly exceeding sales in Q4 2025,” said John Neuffer, president and CEO of the SIA. “Strong sales across the Asia Pacific region, the Americas, and China drove global semiconductor market growth, highlighting broad and robust demand for semiconductors and the countless tech products they enable.”
Regionally, year-to-year sales in March were up in the Asia Pacific/All Other (108.5%), the Americas (83.1%), China (74.8%), Europe (46.5%), and Japan (7.4%).
Global semiconductor market 2000 to Q1 2026 Source: eeNews Europe
“We had a strong start to 2026 with a 25% quarter on quarter growth in Q1, that is the strongest quarterly growth rate ever in the whole history of the industry in 70 years,” said Penn. However he points to a coming downturn. “We are the only analyst predicting a downturn will happen, maybe even this year but certainly next year as DRAM capacity comes online at the end of this year and the beginning of next year,” he said.
This differs from other analysts who see the demand for processor, GPUs and memory for datacentre and AI as a fundamental, seismic change in the industry.
IDC’s latest forecast last week also projects the industry will surge past the $1 trillion revenue threshold in 2026 to $1.29tn, up 52.8% year over year from $842.8 billion in 2025.
The memory segment is at the epicentre of this shift: DRAM revenues alone are projected to nearly triple in 2026 to $418.6 billion, driven by demand for high-bandwidth memory (HBM) and DDR from hyperscalers and AI infrastructure providers. Meanwhile, non-memory semiconductors are growing at a robust but more measured pace, reaching $693.5 billion in 2026.
“The memory market is at an unprecedented inflection point, with demand materially outpacing supply. For an industry long characterized by boom-and-bust cycles, this time is different. The rapid expansion of AI infrastructure and workloads is placing significant pressure on the memory ecosystem. As a result, the market is shifting from a cyclical recovery following the 2023 downturn to a more structurally constrained environment, with clear implications for end markets.” said Jeff Janukowicz, Research VP, Semiconductors & Semiconductor Manufacturing at IDC.
Penn disagrees. “This time it was the average selling price (ASP) that recovered which is very, very unusual,” he said. “We have a red hot datacentre boom but the rest of the market is struggling and is masking a lot of things that are happening in the rest of the industry with excess capacity and inventories. History tells you when the ASP growth starts to slow it collapses.”
“Industry growth is currently fuelled by a leap of faith in AI and the fear of missing out and if the broader chip recovery needs a strong global economy to thrive,” he said, “The average ASP growth is zero so somewhere down the line there will be a 60 to 80% fall to offset the current growth.”
He also points to capital spending (capex) being well above average as a signal for a coming downturn.
“Not everyone is playing in AI so a lot of companies did not see that growth,” he added. “Global capex is still stubbornly high and China is the villain in this scenario. For bleeding edge investment you can argue that is justifiable for the AI boom but it is also risky as if the AI demand goes away there will dramatic overcapacity.”
“There is going to be a correction,” he said. “Either the AI demand will tank or the infrastructure can’t keep pace with demand or excess capacity in DRAM will come on line and that will tank ASPs and crash the market. DRAM capacity will come online at the start of next year, even the end of this year. Market booms never last and when the market corrects you will see the market go negative.”
“Any forecast right now is a pure guess so we have come up with a set of scenarios again,” he said, The boom forecast, it could grow 100% this year, this is unreal, we’ve never seen anything like this before.”
IDC is more bullish, predicting semiconductor revenues reaching $1.75 trillion by 2030. This is based on memory pricing normalizing but remaining structurally higher than pre-AI levels and non-memory semiconductors continuing steady growth, driven by AI adoption across devices and industries.
“What the data makes clear is that the semiconductor market has undergone a permanent expansion of its addressable opportunity. AI infrastructure has reset the demand baseline, memory has repriced as a strategic asset, and the industry’s growth trajectory through 2030 is no longer contingent on a consumer refresh cycle,” said Nina Turner, Research Director, Semiconductors at IDC.
As during the Covid chip shortages when companies turned to ‘uncancellable’ contracts, datacentres operators have been signing long term supply agreements for memory, but these won’t work, says Penn. “Strategic memory agreements just delay the inevitable,” said Penn. “If you are forced to take them you won’t buy them later on. HBM is just a stack of memory chips, it is just another commodity, that’s the nature of the memory market.”
www.futurehorizons.com; www.idc.com; www.semiconductors.org
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