The semiconductor industry experienced heightened volatility after the COVID-19 pandemic ended as many players saw demand for their products plummet and supply chain disruptions affected operations. However, the tide has since turned and the 2026 outlook of the industry by leading consultancy firm Deloitte shows that the industry is going to continue growing driven by the exploding demand for AI chips and related products.
Deloitte forecasts that chip sales will be just shy of a trillion dollars this year. Industry growth is expected to shift gears from 22% annually to 26% YoY.
However, the consultancy firm flags the concentration of this industry growth. Deloitte’s data shows that about half a trillion dollars from that projected global revenue will go to semiconductors needed by generative AI. In terms of volume, AI chips account for a paltry 0.2% of all chips currently being manufactured. This shows how lopsided the revenue growth is. The reality is that AI chips currently command high profit margins and this is creating other challenges within the industry.
For example, more companies are pivoting to making chips intended for generative AI use, and that is starving other market segments of the volumes of chips that they need to address the requirements of other applications, such as the chips needed to make PCs. Buyers of those semiconductors now have to contend with higher prices and shrinking inventories.
Deloitte points out that the semiconductor industry could suffer if any shock affects the ability of tech firms to construct data centers quickly enough or if the monetization plans of providers of AI solutions fail to materialize as expected. Investors in tech companies could lose patience and start selling their stock, which could in turn deny companies the CapEx they need to implement their AI growth plans. When that happens, demand for AI semiconductors could take a hit and drag down the performance of the entire industry.
This year, Deloitte says, industry consolidation is likely to pick up pace as larger firms with ambitions of scaling their operations acquire smaller ones that are struggling to claim their spot within the industry. Already, Texas Instruments has announced plans to acquire Silicon Labs in a deal valued at $7.5 billion expected to be completed next year.
For major players like Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM), 2026 could be another standout year in terms of revenue growth, but further upside potential is likely to be tempered by how well their clients hit their growth and monetization targets going forward.
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