Future Horizons: May Semiconductor Update

We’re happy to share the Future Horizons Semiconductor Might replace.

You could find the newest business insights under:

Government Abstract

Might’s WSTS Report noticed March’s complete month-to-month semiconductor gross sales up 88.1 % vs. March 2025, albeit down 8.5 % from February 2026.  This month-on-month decline must put within the context of February’s record-breaking 25.7 % month-to-month progress.

This progress, nevertheless, was solely attributable to ICs, up 99.5 % year-on-year, extra particularly to Reminiscence, up 269.1 %, and Logic, up 38.9 %, every in flip pushed by the nonetheless white-hot AI-datacenter explosion.

In sharp distinction, IC progress excluding Reminiscence was simply 28.3 %, Analog 13.8 %, and Micro 8.8 %, with Opto up 12.3 %, and Discretes up simply 10.1 %.

Annualised IC unit progress was comparatively robust in March, up 20.3 % vs. February’s 9.9 %, however this doesn’t detract from the very fact the present stratospheric IC progress is being pushed by ASPs, not actual market demand.  This, plus the very fact it’s severely AI Datacentre dependent, makes the present restoration untenable in the long run.  IC ASPs will drop like a rock when the datacentre increase slows, and the reminiscence market will crash as soon as new capability comes on stream.

IC unit progress was additionally single digit, at simply 9.9 %, re-enforcing the very fact the present stratospheric IC progress is being pushed by ASPs, not actual market demand.  This, plus the very fact it’s severely AI Datacentre dependent, makes the present restoration untenable long term.

ASPs will drop like a rock when the datacentre increase slows, and the reminiscence market will crash as soon as new capability comes on stream.

Market Outlook

At our latest IFS2026 business webinar, we up to date our outlook for the remainder of this 12 months.  Given the present progress charges are wild, the numbers insane, with no clear baseline to underpin a constant set of assumptions, we elected to offer a collection of forecast steering eventualities in lieu of our conventional forecast with bull and bear boundaries.

The chance of which state of affairs materialised relying on three elements, specifically, the worldwide economic system, the AI increase and reminiscence ASPs.

These in flip depend upon how lengthy the Center East conflict hostilities and related disruptions proceed; if (when?) investor and AI market knowledge centre exuberance wanes; and the way quickly new DRAM capability comes onstream.

The online outcome was a possible market progress of anyplace from 13 to 101 %.

The important thing distinction between our view in the marketplace and the overwhelming business consensus is the impression of AI.

We don’t settle for that immediately’s AI increase represents a courageous new world of AI-driven semiconductor actuality, given AI chips account for between 25-50 % of the full income, relying on the way you depend it, however considerably lower than 1 % of the full unit shipments.

The present boon might be the second longest on report, with greenback progress charges to die for, however unit progress is abysmal and the non-AI markets struggling.

While we completely imagine AI will finally remodel the world as we at present realize it, simply because the automotive, air and rail journey, telecommunications, radio, TV, calculators, computer systems, the Web and quite a few different breathtaking innovations modified the way in which we reside, work and play, we imagine these all take time to materialise and the sturdy path of the related technological evolution has but to emerge.

We’re the one analyst at present forecasting an business downturn “perhaps this 12 months, if not, subsequent” however we imagine the dangers are clear given the present market anomalies.

Unit progress is under the business trend-line and market progress is being pushed by ASPs not unit demand, which is uncommon. It’s normally the opposite approach spherical.

The business’s latest greenback progress is alarmingly unprecedented with Q1-2026, usually the weakest quarter of the 12 months, seeing quarter-on-quarter gross sales develop 25 %. That’s not solely the strongest progress for Q1 over This fall progress within the 70 plus 12 months business historical past, the primary quarter progress common is minus 3 %, it’s the highest quarterly progress price ever.

If datacenter funding weakens, AI chip gross sales will inevitably comply with.

The extra optimistic chip forecast present grabbing the headlines would see the chip market improve its share of the US$126 trillion world GDP market from 0.6 % to 1.5 % by 2035, rising 3 times as quick because the historic GDP progress price, twice as quick because the pre-AI business common, and with no slowdown in progress.

With all due respects, this isn’t going to occur. There will probably be a correction. Both AI demand will tank, or the infrastructure won’t be able to maintain tempo with the demand.

Benefit from the present occasion however proceed with excessive warning. Don’t be misled by present headline greenback progress numbers, they mirror ASP growth, not underlying demand.