We’re pleased to share the Future Horizons Semiconductor January update.
For the latest industry insights read on below:
Executive Summary
Annualised growth rates fell back slightly in November, with Total Semiconductor sales up 29.5 percent year on year vs. 32.6 percent in October and 27.5 percent in September, but still above August 2024’s 28.5 percent cyclical peak.
All three sectors continued to show positive annualised growth, albeit at much lower single digit numbers vs. Total ICs stratospheric 33.0 percent performance, with Opto and Discretes growing a respectable 7.3 and 3.7 percent respectively. Last month’s numbers were 36.7, 6.7 and 8.5 percent.
With the overall semiconductor market back on a strong double-digit annualised growth trend, the 18-month period of flat growth from Jan 2024 to July 2025, looks like it was just an extended consolidation pause in the recovery path from the July 2022 bust, similar to what happened in the January 2020-2021 recovery.
Market Outlook
Looking ahead to 2026, the outlook is cautiously positive, but highly uncertain. The strong growth in Q3 2025, one of the strongest growth quarters on record surpassed only by Q3 2009, lifted the full-year growth to 22 percent.
However, this strong performance reflected a tale of two markets with growth heavily concentrated in the AI infrastructure and HBM memory markets, not the traditional end markets such as smartphones, PCs, notebooks, wearables, TVs and automotive. Critically, 2025’s growth was ASP, not unit, driven with unit shipment volumes still languishing in recession.
The two big questions entering 2026 are: “Will the AI hyperscale infrastructure market boom continue unabated” and “How strong will the non-AI market recovery be?”
Other key unresolved questions include: “When unit growth will resume”, “Can ASPs continue to rise” and “What will be the impact of the over-investment in non–bleeding-edge CapEx, particularly in China?”
With the global economic outlook tenuous at best, these factors collectively drive an unusually high level of uncertainty for 2026. Whilst 2025’s strong value growth may have looked like a super cycle, the underlying detail showed it was not a broad-based industry recovery.
Just as COVID-19 triggered the 2020-21 boom and the subsequent 2022 collapse, Chat GPT triggered the 2024-25 AI hyperscaper boom and the risk of an AI demand correction in 2026 cannot be ignored.
If current AI demand stumbles and other markets fail to rebound, today’s primary growth engine could quickly become tomorrow’s biggest vulnerability.
On balance, given the wide range of uncertainties and the unlikely scenario of no first half year major shocks, the chip market could likely grow 12 percent in 2026, possibly even as high as 18 percent. What we are far less confident about is the sign in front of this number.
If it is ‘business as usual’ and there are no major hiccups, 2026 growth would be plus 12 percent. If, on the other hand, the AI infrastructure market collapses and the global economy slows, 2026 growth would be minus 12 percent.
Read The Full Report Here: https://www.futurehorizons.com/page/137/
