We are pleased to share the Future Horizons Semiconductor February update.
You can find the latest industry information below:
Executive Summary
December’s overall annual semiconductor growth rate, at 41.3 percent, was up from November’s 36.7 percent and October’s numbers of 33.0. It was also significantly higher than the Covid-boom peak of 39.3 percent and a steep climb.
At first glance, these are champagne output numbers, but the glitzy headlines and glitz hide the industry’s wider malaise.
ASP-driven growth is as volatile as a fair-weather friend and our champagne remains firmly locked in the cooler until we see signs of unit-driven, non-memory, broad-based recovery.
Market Outlook
How long this ASP-driven market growth can last is very difficult to predict. It lasted a year in 2021-22, but if the 2025-26 spurt lasts, it will slow in 2027.
Big uncertainties remain “How long will AI-driven growth last” and “Is the global economy strong enough to drive the recovery of the broader industry?” Added to these risks now, given the maddening memory famine, is “How quickly will additional memory capacity come into circulation?”
The trigger for the next crash will be an increase in supply, with its long gestation period, or a decrease in demand, which can be very sudden. Either way, once the impact takes over, ASPs will collapse and the growth pendulum will swing back quickly and irreversibly.
With no signs of slowing current growth, a strong first quarter will blow our forecast of 12 percent, with an 18 percent rise, out of the water, with growth now north of 40 percent.
Even if the market in 2026 falls well outside, the annual growth will still be in the middle of twenty-five, that is why the number of recent announcements of the trillion chip market in 2026, increased by 26.3 percent in 2025, reaching US $ 1.4-1.6 trillion in 20234 and US $ 2034 trillion Average of 11.7 percent and strength amazing, double-digit, no-recession, uninterrupted home runs for the next ten years.
Although we previously had three consecutive years of strong double-digit growth, namely 1976-1980, 1986-1988, and 1993-1995, only 1976-1980 lasted for more than five years; the other two crashed in the fourth year.
The global recession closed the first two chip booms, given that any drop in demand automatically puts the balance of demand oversupply, with overinvestment and the resulting glut in the DRAM market struggling to keep up with the boom at the time, driven by Windows OS, PC demand caused the 1996 market collapse.
Implicit in this addition to the current market is the endless market demand for AI-hyperscaler infrastructure investment, the unsatisfied demand for high-performance processors, and the memory supply that is completely unable to keep up with demand, as well as ever-rising chip prices and a faltering world economy.
Even with rose-colored glasses on, that’s a tall order, considering any one of these failures could bring the bull to an abrupt end.
And it’s something that hasn’t happened in the 80-year history of the chip industry, or the vacuum-tube business before it.
Our overall message for 2026 is clear; enjoy the party if you can but proceed with extreme caution and don’t get distracted by the 2025 dollar boom. Most of that growth reflects an increase in ASP rather than basic demand.
Declines and corrections in the growth of the chip market are inevitable and inevitable, the trigger and only the time is uncertain.
If the trigger is a correction in AI demand, the decline will occur in Q4-2026.
If that demand remains strong through 2026, then the crash will come in Q1-2027 when additional DRAM capacity comes into circulation.
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