China-Chipocalypse: Trade sanctions backfire
3. February 2025
At the Future Horizons Semiconductor Industry Update Conference, CEO Malcolm Penn emphasized that 2026 will be a dynamic year for the semiconductor industry. Geopolitical tensions, economic fluctuations, and rapid AI adoption are creating both challenges and opportunities for strategic players.
While forecasts point to a $1 trillion semiconductor market by 2030, Penn cautions that growth will require careful management. The current expansion is real, but success depends on disciplined investment and market awareness.
Growth Driven by Innovation
The semiconductor market’s strong 2025 performance was led by rising average selling prices (ASPs), particularly fueled by AI data centers. Non-AI markets remain softer, but demand for innovation continues to open new avenues. AI investment is uncovering opportunities in high-performance computing, advanced logic, and memory segments, even as the industry addresses structural imbalances.
Entering 2026, the combination of AI growth and strategic planning presents a chance to align fundamentals with market momentum. Penn encourages executives to focus on four key indicators: global economic growth (IMF), unit shipments (WSTS), fab capacity (SEMI), and ASPs (WSTS), which provide a clear picture of sustainable market trends.
Economic Outlook: Resilience and Opportunity
Global GDP growth remains steady at around 3.3%, providing a stable backdrop for expansion. The US economy continues to benefit from AI investment and strong equity markets, while Europe and China offer selective opportunities in niche applications. Despite high interest rates and political pressures, companies that adapt strategically can capture growth across regions.
Capex and ASPs: Strategic Investments Matter
Semiconductor shipments are gradually recovering, and targeted capital expenditure supports innovation in advanced nodes. China continues to play a significant role in global capex, particularly in logic and memory, while ASPs remain strong due to AI-driven demand. Historical trends suggest pricing cycles will normalize, but careful planning allows companies to benefit from current high-value segments while preparing for the future.
2026 Forecast: Growth with Focus
The global semiconductor market grew 22% in 2025, reaching $769 billion, primarily ASP-driven. For 2026, Future Horizons projects 12% growth to $813 billion, with an optimistic scenario of 18%. While risks remain, including potential AI demand shifts or infrastructure constraints, companies that align capacity, investment, and innovation stand to capture meaningful growth.
AI Reality Check and Opportunity
AI adoption continues to accelerate, powering hyperscale data centers and advanced computing applications. While real-world returns vary, investment in AI infrastructure provides a foundation for long-term market expansion. The industry’s focus should be on differentiating genuine demand from hype, ensuring innovation drives measurable value.
Semiconductor growth remains strong, with exciting opportunities across discretes, opto, and analog segments. By balancing innovation, strategic investment, and disciplined planning, companies can navigate volatility while capturing new markets. 2026 is a year for proactive strategies, targeted growth, and long-term opportunity.