5 Expectations for Semiconductors Industry in 2026

1. AI will Predominantly Remain in the Cloud

The growth in datacenter investments to support LLMs will continue strongly next year, as LLMs continue to grow in parameters.

2. New Transistor Architecture Shakes Up Foundry Market

The move to next-generation 2nm processes will improve both power consumption and performance.

3. HBM4 Leads Memory Market Recovery

Amid the leading HBM manufacturers’ aggressive scaling of HBM3E production, the next wave of AI chips with the new 16Hi HBM4 is expected to achieve volume production in 1H 2026.

4. Advanced Packaging and Photonics Turn the Heat Down

Silicon photonics, in the form of co-packaged optics (CPO), promises to reduce networking power consumption by up to 70% while also potentially increasing data transfer speeds.

5. US/China Geopolitics have Deep Repercussions

The rapidly shifting technology landscape seems almost slow compared to the pace of change happening at a global political level, with tariffs and trade restrictions creating a fluctuating business environment.