We’re pleased to share the Future Horizons Semiconductor August update.
You can find the latest industry insights below:
Executive Summary
August’s WSTS Report saw June’s total semiconductor sales up 135.6 percent vs. June 2025. Five-week month adjusted month-on-month sales, however, were down 11.6 percent vs. May 2026. The irrefutable evidence shows the first half-year semiconductor market up 102.5 percent vs. the same period last year.
Never before in the 79-year industry history has the market witnessed such growth rates, even more profound given the industry’s absolute overall size. On current trends, the industry will effortlessly break through the US$1 trillion barrier in September 2026 (November’s Report).
Little wonder the chip world is ablaze in euphoria and optimism, with an abundance of accolades citing “Strong sales underscoring the strength of global chip demand and vital role semiconductors play in powering the next generation of technology innovation and economic competitiveness.” In the face of such furor, what could possibly go wrong?
Two critical factors make these growth numbers somewhat dubious.
First, growth is being driven by price (up 79.8 percent) and not units (up only 12.1 percent) and second, it is not broadly based but driven by a single end market application, the white-hot AI hyperscaler boom and its deep-pocketed, at least for now, customers, across a limited number of product sectors.
Only time will tell whether our cautionary view is warranted and if we are wrong, you will read it here first. Meanwhile the growth numbers seem unstoppable; for everyone’s sake let’s hope it’s not an AI Trojan Horse.
Market Outlook
June saw the overall semiconductor market grow 135.6 percent vs. June 2025, driven by a 151.4 percent value growth in ICs. That in turn was the result of a 104.4 percent annualised increase in ASPs and a 23.0 increase in unit shipments.
June also saw the Americas global market share shrink slightly, to 35.0 percent, down 1.1 percentage points from May, but still sizeably ahead of both AsiaPac and China at 27.5 percent, down 0.2 points, and 28.3 percent, up 1.6 points, respectively, with Europe and Japan bringing up the far distant rear at 5.4 percent, down 0.5 points, and 3.7 percent, up 0.1 points respectively.
June 2026 was the 34th consecutive month of positive year-over-year growth making it the second longest growth period on record, with only the 35-month June 2002-May 2005 upturn longer, but only one month.
The critical distinction, however, between this growth spurt and all previous upturns is it driven by price increases, not strong unit growth, which in turn is being driven by a single, highly specialist, end market application, namely AI hyperscalers and its associated, equally unique, Logic, GPU and Memory device needs.
It has not been driven by a strong economic recovery or a broad-based upturn in chip demand.
What we are seeing is a chip market that is currently dominated by AI, with its associated product shortages and sky-high ASPs. The much broader, traditional chip markets are growing much more modestly, especially the consumer-drive automotive, computer and smartphone sectors, weighed down by an overall still relatively weak global economy and inflated memory costs.
We continue to caution against taking the current rosy growth numbers on face value and interpreting these as a sign of robust industry health. We strongly believe any ASP-driven growth is unsustainable in the long-term and a downward correction in pricing is inevitable, either because new suppliers or alternative lower-cost solutions enter the market, or because the current product shortages are alleviated, either because additional capacity comes on stream or the end market demand softens.
Either way, the floodgate of current eye-watering trillion-dollar growth forecasts will be curtailed, with even a chip market value recession not out of the question.
The best one can hope for is a soft-landing adjustment, but this seems unlikely given the extreme polarisation of the current market growth. There simply is no other sector able to afford the high IC and associated advanced packaging costs or pick up the volume slack were this build out to slow down or worse still collapse.
