Semiconductor Market Outlook: Key Trends and Challenges in 2026

Virtually every piece of modern tech depends on semiconductors, which are rightfully considered to be modern marvels and the foundation of the digital world.

Over 15 billion transistors (each being smaller than a virus and with the ability to turn on and off billions of times per second) are found in the processors that power contemporary smartphones. Some high-end processors today often have more than 100 billion transistors.

Today, these tech wonders form the basis of AI data centers.

Did you know that if you counted all the transistors on a chip, it would take you over 6,000 years?

Market Projections: Forecasting the Semiconductor Landscape Through 2025

The semiconductor industry forms the foundation and is the driver of data centers, AI, autonomous vehicles and other rising technology trends, and as such, it had a strong 2024, with the market projected to grow to over US$1 trillion in 2030, from the current US$627 billion according to both Deloitte’s 2025 global semiconductor industry outlook and PwC’s 2026 global semiconductor industry outlook.

If the industry’s growth continues at the same pace, PwC forecasts that in just 15 years, by 2040, its revenue could reach US$2 trillion.

Transformative Impact of Artificial Intelligence (AI) on Chip Design and Manufacturing

AI is changing the way semiconductor chips are designed and produced by being built directly into specialized software tools known as Electronic Design Automation (EDA) tools. Engineers rely on EDA to create chip designs, according to Semiconductor Engineering.

In the PwC annual global semiconductor industry outlook report, experts evaluated the potential evolution of various technologies that have strong ties to semiconductors, with advanced AI being highly feasible and offering strong market potential.

The technologies within the orange square are considered to be both highly feasible and offering strong market potential. Other emerging technologies are shown in grey.

Suggested reading: Future of the China Semiconductor Industry and 2030 Market Predictions

How AI can enhance chip performance

Here is how engineers see AI being used to address a number of specific chip production side issues:

1. Detection and classification of wafer defects

Using computer vision/deep learning to spot microscopic defects, AI can detect scratches, pattern irregularities, and contamination, according to a report from experts at the Department of Business Administration at Chaoyang University of Technology, Taiwan.

2. Yield prediction and improvement

In the process of chip production, machines produce a great deal of data – temperature, pressure, chemical levels, and maps – that indicate where defects have been spotted on each wafer.

AI can help factories to detect problems at an early stage, show the core of a problem, and recommend adjustments to fix the process, according to experts at Shanghai University and Singapore’s Nanyang Technological University in their paper.

3. Process optimization and control

To create chips, machines have to undertake very precise steps involving lithography, deposition, and etching, and even minor deviations can ruin a batch (a group of wafers processed together simultaneously in a single machine cycle).

In such cases, AI can:

1. Assist in monitoring the process in real time and adjust machine settings automatically on the fly if the temperature, pressure, or alignment start to shift.
2. Predict when a machine is about to deviate from the specifications and solve minor issues before these become more serious.

Supply chain resilience and adaptation to geopolitical challenges in the semiconductor industry

Over the last few years, the semiconductor industry has faced growing geopolitical tensions and natural disasters that have forced players to improve supply chain resilience.

The Deloitte report highlights some of these issues:

Geopolitical

1. In late 2024, the United States imposed limits on the export of powerful processing chips and manufacturing equipment on over 100 entities (mostly Chinese companies) using a ‘small yard, high fence’ policy to limit technology that is important to defense and military AI.

2. In response, China limited shipments of germanium and gallium, which are vital for semiconductors, which in turn worsened material shortages in the United States.

3. South Korea is responsible for the production of around 75% of global Dynamic Random Access Memory (DRAM), which is a type of semiconductor memory used as a computer's main RAM, and its declaration of martial law in December 2024 caused political unrest and could affect chip production and logistics.

4. Ongoing conflicts in Ukraine, Russia, and the Middle East also continue to have an impact on the flow of raw materials.

Natural disasters

Hurricane Helene, which hit the USA in 2024, had a serious impact on the semiconductor supply chain after it caused damage to quartz mines in Spruce Pine, North Carolina, which provide most of the world's supply of this material. The storm impacted the transportation infrastructure and caused flooding and power outages, which forced the mines to suspend operations.

Nevertheless, semiconductor supply chains operated well in 2024, and currently there is no reason to believe that 2025 has been any less resilient although there is always a risk, which brings us to the next aspect – sustainability.

The role of sustainability and eco-friendly practices in semiconductor manufacturing

The production of semiconductors requires a great deal of energy, ultra-pure water, and chemicals throughout sophisticated processes such as lithography, etching, and deposition.

In a nutshell, these are the key issues that are linked to the industry’s impact on the environment:

• High energy use

The graph below shows how the power consumption of data centers around the world has increased over time.

• Large volumes of water consumption for wafer rinsing and cooling
• Emissions of high-global-warming-potential gases (e.g., perfluorinated compounds(PFCs))
• Polyfluoroalkyl substances (PFAS) persist in the environment, with these also being referred to as “forever chemicals”.

Latest data and developments on environmental practices

Industry players are adopting more sustainable methods and have announced ambitious goals and innovations.

Emissions and energy

According to TechInsights' Global Semiconductor Carbon Emissions Forecast (2025-2030), production-related emissions are expected to reach 277 million metric tons of CO2 equivalent in 2030, with AI accelerators alone accounting for a 300% rise between 2025 and 2029.

Major commitments from tech giants:

• TSMC has announced its goal to reach net-zero emissions by 2050 and zero emissions growth by 2025 (returning to 2020 levels).
• Intel has pledged net-zero operations by 2040 and to reach 100% renewable energy usage for all its international activities by 2030.
• Samsung has set a goal to lower water level usage to 2021 levels in 2030, recycle 99.9% of waste by 2030, and reach net-zero emissions by 2050.

Water usage

● While experts from IDTechEx expect global water consumption in semiconductor manufacturing to double by 2035, GlobalFoundries (a multinational semiconductor manufacturing and design company) managed to achieve 98% wastewater recycling in 2024 using advanced filtration.

PFAS

• PFAS are used in up to 1,000 processes, but regulation is becoming stricter.
• Imec and partners presented PFAS-free EUV chemically amplified resists.

Workforce dynamics: addressing talent shortages in the semiconductor sector

Due to its explosive growth, the semiconductor industry lacks professionals. According to Deloitte, there are currently around 2 million people working in the field, and by 2030, the lack of talent will exceed one million specialists.

There are several reasons for this shortage.

Skill gaps and emerging roles in semiconductor engineering

The semiconductor industry continues to face a shortage of talent proficient in engineering, chip design, and manufacturing, and although AI can help address some of these gaps, it cannot fill all of them.

Some of the issues the industry faces in terms of workforce include:

• Declining enrollment in important disciplines – for instance, fewer than 100,000 Americans graduate each year in computer science and electrical engineering
• An aging talent base, specifically in the United States and Europe
• Geopolitical uncertainty impacts the supply chain and global workforce availability, making it difficult to hire new talent
• Onshoring and reshoring challenges – attempts to localize fabrication, assembly, and testing mean more local talent is required, which in turn leads to delays in the opening of new facilities.

Solutions and strategies

Businesses and governments are struggling to find employees who are qualified to design and manufacture chips, but various solutions could help:

• Partner with schools, colleges, and governments to fund training and vocational programs
• Use data and smart hiring tools to find the right people more quickly
• Use AI for automation so that specialists can focus on more creative tasks
• Improve Diversity, Equity, and Inclusion (DEI) to ensure that every specialist feels welcome
• Improve employee retention, build a strong and unified company culture, and adopt a combination of full-time and freelance workers to keep the talent pipeline strong for the future.

To attract new talent, organizations should provide stability, trust, and clear growth opportunities, making the semiconductor profession more attractive to students and early-career professionals.

Final word:

A number of significant trends, such as supply chain resilience, generative AI, geopolitical conflicts, and sustainability, have arisen from the semiconductor industry's current state of change.

This industry can overcome uncertainties and propel global innovation by investing in cutting-edge technology and new talent while at the same time training and retaining the already existing one, reinforcing supply chains, adopting sustainability, encouraging collaboration, and leveraging AI.