The global semiconductor foundry industry is set for robust expansion in 2026, driven by accelerating investments in artificial intelligence by cloud service providers and startups, according to the latest research report from TrendForce.
The size of the global foundry industry in terms of annual revenue is projected to reach $218.8 billion, indicating annual growth of 24.8 percent in 2026. The surge in global foundry industry revenue highlights the strength of AI-led demand across advanced semiconductor manufacturing. TSMC is expected to lead the market with an estimated 32 percent annual growth, supported by strong demand for process technologies.
AI processors drive advanced node demand
Demand for advanced nodes is being fueled by AI GPUs from major chipmakers such as NVIDIA and AMD. At the same time, North American cloud giants including Google, Amazon Web Services, and Meta are rapidly developing their own AI chips.
AI innovators like OpenAI and Groq are also accelerating custom silicon development. Many of these chips are expected to enter volume production in 2026, becoming key drivers for 5/4 nm and more advanced process technologies.
Capacity constraints and rising prices
TrendForce notes that TSMC’s capacity for 5/4 nm and below nodes will remain fully utilized throughout 2026. In response to sustained demand and tight supply, TSMC has increased foundry pricing across advanced nodes, with order visibility already extending into 2027. Further price hikes in the coming years remain a possibility.
Similarly, Samsung Electronics has reported a significant uptick in orders for its 5/4 nm-class nodes and has informed customers about price increases starting from late 2025.
Mixed outlook for mature nodes
In the mature-node segment, both TSMC and Samsung are reducing 8-inch wafer capacity, even as demand for AI-related power management ICs supports utilization levels. Foundries have begun signaling potential price increases in this segment for 2026.
Demand for 8-inch capacity is being driven by AI power components and domestic consumption in China. Additionally, PC and notebook ODMs have started building inventory early in 2026 due to memory shortages and expectations of rising IC costs.
Display driver ICs (DDI) and CMOS image sensors (CIS) have also shown relatively stable demand compared to previous cycles, contributing to improved market momentum.
However, full utilization across 8-inch fabs is unlikely, as uncertainties around consumer electronics demand in the second half of 2026 could lead to shipment adjustments. This divergence in utilization across foundries may limit widespread price increases.
12-inch wafer expansion continues
Capacity expansion for 12-inch wafers, particularly at 28 nm and larger nodes, will continue in 2026. However, high memory prices are expected to dampen consumer electronics demand, leading to cautious shipment forecasts for end devices.
While product upgrades and process migrations may improve average selling prices and product mix, utilization rates for mature 12-inch nodes are projected to remain below full capacity. Growth momentum is expected to remain concentrated in advanced nodes, underlining the central role of AI in shaping the semiconductor industry’s future trajectory.
BABURAJAN KIZHAKEDATH
