AI adoption to generate $1 trillion in semiconductor industry revenues by 2026

The global semiconductor industry is set to surpass an unprecedented milestone in 2026, with revenues projected to exceed $1 trillion according to a recent market analysis by Omdia. This remarkable growth is largely attributed to the surging demand for memory and logic integrated circuits (ICs), driven by rapid advancements in artificial intelligence (AI). Semiconductor revenues are forecast to grow by 30.7% year-over-year (YoY) in 2026, underscoring the transformative impact of AI on the sector.

AI fuels semiconductor demand

The semiconductor market is experiencing unparalleled growth in memory and logic IC revenues, which are vital for AI applications. Omdia adjusted its revenue forecast for 2025 to reflect a significant year-over-year increase of 20.3%, following stronger-than-expected performance in the third quarter of 2025 and anticipated robust growth in the final quarter. By 2026, the demand for DRAM and NAND memory ICs is expected to remain a key driver of the industry’s meteoric rise.

"Myson Robles-Bruce, Senior Principal Analyst at Omdia, highlighted the concentrated nature of this demand, stating, ‘Semiconductor revenue growth in 2026 is being driven by highly concentrated, AI-related demand, rather than broad-based consumer behaviour or industrial production trends that have historically influenced the market.’ He added that without the contributions of memory and logic ICs, overall growth would fall from 30.7% to just 8%."

Computing and data storage lead the charge

The computing and data storage segment is expected to take the lead in semiconductor revenue growth. In 2026, this segment is projected to grow by a staggering 41.4% YoY, surpassing $500 billion in revenues. This growth is fuelled by heightened demand for data centre servers and other memory-intensive applications, alongside rising memory IC prices. Notably, enterprises are investing heavily in AI infrastructure and model development, with the top four hyperscalers forecast to spend approximately $500 billion on capital expenditures in 2026.

AI-driven advancements are also spurring a refresh cycle for enterprise notebook PCs, further contributing to the growth of this segment.

Consumer electronics and wireless applications see strong prospects

Beyond computing, consumer electronics and wireless applications are emerging as substantial growth areas for semiconductors in 2026. Rising memory pricing, the introduction of next-generation foldable smartphones, and growing demand for connected devices are key contributors to this trend.

Upgrades in AI-enhanced photography and flagship smartphone refreshes from tech giants such as Apple and Samsung are expected to bolster industry revenues. Additionally, wearables, smart speakers, and virtual reality (VR) headsets are predicted to record meaningful gains.

Economic factors temper optimism

While the outlook for the semiconductor industry in 2026 is overwhelmingly positive, Omdia has identified various macroeconomic risks that could impede growth. Challenges such as inflation in the United States, rising labour and energy costs, supply chain disruptions due to reorganisation and governmental policies, and price volatility stemming from large-scale AI investments remain potential obstacles to sustained expansion.

A transformative moment for the industry

The $1 trillion milestone represents a unique moment in the history of the semiconductor industry, highlighting the profound impact of AI on technology and infrastructure. "Without the contributions of memory and logic ICs, overall semiconductor revenue growth would fall from 30.7% to only 8%, highlighting the nature of the demand driving recent market surges", said Myson Robles-Bruce.

As the sector adapts to meet the evolving demands of AI, the transformative potential of these technologies continues to shape the future of global semiconductor markets.

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