We’re happy to share the Future Horizons Semiconductor July replace.
Yow will discover the most recent trade insights beneath:
Government Abstract
July’s WSTS Report noticed Might’s whole semiconductor gross sales up 118.4 p.c vs. Might 2025. Month-on-month gross sales have been additionally up 18.1 p.c on April 2026.
To say the chip market is present process a increase is, by any measure, a numerical understatement, with present annualised progress charges twice the highs recorded in both the mid-1990’s reminiscence market or early 2000’s dot com increase years.
It will nonetheless even be a gross over-simplification and doubtlessly deceptive. This isn’t a ‘regular’ chip trade increase within the historic ‘three good years and one unhealthy’ boom-bust sample.
The present eye-watering progress is being pushed by ICs, up 131.9 p.c, extra particularly by Reminiscence, up 320.9 p.c, and Logic, up 49.2 p.c, every in flip pushed by a single finish market software, the white-hot AI hyperscaler increase.
Much more disturbing than the disparity in sector progress was the actual fact progress was being pushed by ASP will increase, not unit demand. This, we imagine, makes the present progress charges untenable and a downstream correction inevitable.
We’re nonetheless presently out on a limb and alone with this opinion; certainly, the final market euphoria exhibits the alternative with no signal of slowing, witness the current WSTS trade consensus forecast calling for 2 additional years of uninterrupted market progress.
Such an prolonged bull run can be an unprecedented trade first in its 70 plus yr historical past, much more extraordinary contemplating the considerably subdued international financial outlook. Prolonged market booms are normally coincident, and pushed by, sturdy GDP progress triggering broader market-based demand and related supply-side shortages.
Time alone will inform if our cautionary view is merited but when we’re unsuitable, we would be the first to confess it and you’ll examine it first right here.
Market Outlook
Might 2026 was the thirty third consecutive month of constructive year-over-year progress making it the second longest progress interval on file, with solely the 35-month June 2002-Might 2005 upturn longer.
The essential distinction, nonetheless, between this progress spurt and all earlier upturns, is the actual fact it’s ASP-driven and never primarily based on sturdy unit cargo progress. It has additionally been pushed by a single, extremely specialist, market sector, particularly AI hyperscalers, and their related, equally distinctive, Logic, GPU and Reminiscence gadget demand.
It has not been pushed by a robust financial restoration or a broad-based upturn in demand. As such, the broader-based Discretes, Analog, Micro, Opto and Sensor product sectors have but to get well.
What we’re seeing is a chip market that’s presently dominated by AI, with its related product shortages and sky-high ASPs. The a lot broader, conventional chip markets are struggling to develop, weighed down by an general weak international financial system.
The over-riding speculation on the forefront of the present increase is that AI will cut back prices, shorten time to market and enhance buyer retention.
In different phrases, it is a basic structural shift that has barely obtained began and, given the massive quantity and huge measurement of the datacentres wanted to energy this revolution, the demand for costly processor chips and reminiscence, in addition to a myriad of different extra conventional parts, will proceed to develop exponentially for the foreseeable future.
While we don’t disagree with the underlying ideas behind the AI alternative, we imagine the present forecasts all ignore two necessary components.
First, these transformations all the time take quite a bit longer to materialise and evolve, with the primary manifestations by no means the form, measurement or kind issue that ultimately ship the answer, assume vehicles, aeroplanes, computer systems or telephones, with a lot of the early adopters chucking up the sponge on the way in which.
Second, it ignores the elemental explanation for all 17 earlier trade downturns: extra provide. The one variable has been what created the oversupply, particularly both overinvestment or a slowdown in demand. As soon as extra DRAM capability comes on line, over-capacity is inevitable … it’s not possible to deliver on new provide in a gradual and orderly style … and reminiscence ASP progress will reverse.
Except after all “It’s completely different this time!”
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