Semiconductors in the AI era: more value, not more silicon

The semiconductor industry has crossed a historic threshold. Yole Group expects the device market to exceed US$1.8 trillion in 2026 and reach more than US$2.7 trillion as early as 2027. By 2031, it should approach about US$3.8 trillion, up from US$707 billion in 2024, a 27.2% CAGR.

Yet this is no classic upcycle. Over the same period, wafer demand grows only about 4% a year and unit volume around 6%. The road to a multi-trillion-dollar industry runs through value on advanced-node logic, HBM and premium NAND, not through shipping more silicon.

This divergence changes the rules. For chipmakers, pricing power, yield and access to high-value nodes now weigh as much as raw capacity. AI is concentrating value in GPUs, memory and advanced manufacturing technologies. The top five players including NVIDIA, Samsung, SK hynix, Intel and Micron generate more than half of the revenue of the top 80.

Equipment and materials vendors face a different equation: they are paid on wafer starts, not on ASPs. They capture value where processing steps become critical, through higher equipment intensity across advanced logic, DRAM/HBM, NAND and advanced packaging, as well as through service and support. In 2025, patterning, deposition, etch & clean, and metrology & inspection remained the largest equipment segments.