Global semiconductor revenue is heading for extraordinary growth in 2026 as artificial intelligence infrastructure demand drives memory prices higher and stretches chip manufacturing capacity. Omdia has raised its 2026 semiconductor revenue growth forecast to 94.1 percent year on year, with exceptional gains in DRAM and NAND pushing memory to the center of the industry’s expansion.
Memory ICs are expected to generate more than 50 percent of total semiconductor revenue in 2026, reflecting the impact of AI servers, accelerators and other memory-intensive computing infrastructure. However, demand is expanding faster than the industry’s ability to manufacture and package advanced chips, creating capacity constraints that Omdia expects to persist until at least 2027, Omdia report said.
AI Boom Creates HBM Supply Crunch
High bandwidth memory has emerged as one of the semiconductor industry’s most significant supply constraints. HBM is substantially more complex to manufacture than conventional DRAM, while large-scale production is concentrated among only three suppliers — SK Hynix, Samsung and Micron.
Demand is being driven by AI accelerators developed by NVIDIA, AMD, Intel and Google, all of which require HBM stacks to handle increasingly demanding AI workloads.
The pressure extends beyond memory manufacturing. Advanced packaging has become another critical bottleneck, particularly for AI processors requiring 2.5D and 3D packaging.
TSMC’s dedicated advanced-packaging manufacturing lines are operating at full utilization. Expanding capacity is difficult because specialized production equipment has long lead times, while semiconductor equipment suppliers including ASML and Tokyo Electron are facing their own manufacturing constraints.
TSMC 2nm and 3nm Capacity Largely Booked
Leading-edge semiconductor manufacturing capacity is experiencing similar pressure. TSMC’s 2nm and 3nm process nodes are largely booked by major customers including NVIDIA, AMD, Broadcom and Apple.
The challenge is being amplified by AI model computing requirements, which are expanding much faster than foundry capacity.
AI processors are consequently competing with smartphone and PC chips for leading-edge manufacturing capacity. CPUs and system-on-chips could face production delays, higher average selling prices or remain on older manufacturing nodes longer than originally planned. This could slow improvements in computing performance and power efficiency across non-AI devices.
Computing and Data Storage Semiconductor Revenue to Jump More Than 150 Percent
Computing and Data Storage will be the fastest-growing semiconductor application market in 2026, with revenue forecast to increase by more than 150 percent year on year and approach $1 trillion.
Data center servers and other memory-intensive applications are driving silicon consumption, while rapidly rising memory IC prices are further inflating semiconductor revenue.
The growth demonstrates how dramatically AI infrastructure is reshaping the semiconductor industry’s revenue mix. Investment directly linked to AI infrastructure is expected to produce record silicon consumption between mid-2026 and early 2027.
DRAM Suppliers Shift Capacity Toward Higher-Margin HBM
The AI boom is also changing memory manufacturers’ production priorities. DRAM suppliers are allocating greater capacity to HBM and other higher-margin memory products.
That strategy is increasing volatility in commodity memory pricing and lead times, affecting smartphones, PCs and consumer electronics.
Automotive and industrial electronics manufacturers are also competing with AI infrastructure companies for memory ICs and packaging capacity.
Older and mid-range semiconductor products face less direct pressure from the advanced-packaging shortage. However, products requiring 2.5D or 3D packaging must compete with AI GPUs and other high-priority processors for constrained capacity.
Smartphone Prices Rise as Memory Costs Increase
Wireless and consumer electronics applications are nevertheless expected to deliver relatively strong semiconductor revenue growth during 2026.
Smartphone price increases started during Q4 2025 and are accelerating in 2026, particularly in premium smartphones. Higher-end devices provide healthier margins, allowing manufacturers to absorb rising memory costs more effectively.
Higher mid-range smartphone prices are also narrowing the price difference between mid-tier and premium devices, potentially encouraging consumers to upgrade to higher-value models.
Upcoming devices including Apple’s iPhone 18 and iPhone Fold and Google’s Pixel 11 Pro Fold are expected later in 2026. New features and expanded AI capabilities should increase the semiconductor content incorporated into these devices.
Beyond smartphones, smartwatches, fitness and wellness wearables, video game consoles and OLED televisions are projected to generate meaningful semiconductor revenue gains, supported by higher component prices and sustained demand.
The semiconductor outlook therefore presents two sharply different trends. AI infrastructure investment is generating record demand and revenue opportunities for chipmakers, memory manufacturers and foundries, while simultaneously raising costs and restricting capacity available to traditional electronics markets.
Omdia expects the imbalance to remain particularly pronounced from mid-2026 through early 2027, with advanced nodes maintaining high utilization and memory and advanced-packaging costs continuing to increase. With semiconductor revenue forecast to grow 94.1 percent, memory accounting for more than 50 percent of industry revenue and Computing and Data Storage revenue rising more than 150 percent toward $1 trillion, AI infrastructure is set to dominate the semiconductor industry’s growth trajectory in 2026.
BABURAJAN KIZHAKEDATH