Semiconductor Industry Revenue Expected to Exceed $1.5T in 2026

Overview

This report is JPMorgan's monthly update based on May 2026 WSTS semiconductor industry data. It notes that industry revenue growth continued to exceed expectations, with May sales up 119% year over year and 16% month over month; excluding memory, sales increased 34% year over year and 0.6% month over month. Against a backdrop of sustained AI spending, improving cyclical trends, and favorable pricing, the report believes semiconductor industry revenue could exceed $1.5T in 2026.

Core views

The core view is that the semiconductor industry remains in a strong upcycle. AI spending momentum continues to spread into accelerated computing, memory, and networking; healthier customer and channel inventories are supporting cyclical improvement across most end markets; and rising memory prices are significantly increasing industry revenue. JPMorgan maintains a positive view and an Overweight rating on the semiconductor industry and related stocks for 2026.

Analysis framework

The report primarily uses monthly WSTS industry data to track sales, unit shipments, ASPs, and year-over-year and month-over-month changes, comparing current-month performance with historical seasonal trends. The analysis also incorporates feedback from semiconductor companies within the coverage universe on demand, orders, backlog, and customer expedites ahead of the CQ2 earnings season.

Methodology notes

• Industry Cycle AnalysisWSTS Monthly Semiconductor Sales Tracking

  Observes industry conditions through monthly sales, unit shipments, ASPs, and metrics excluding memory.

  The report compares May data with April, historical seasonality, and trends over the past three months to assess whether industry growth momentum is continuing.

• Price and Volume DecompositionUnits and ASP decomposition

  Breaks revenue growth down into changes in unit shipments and average selling prices.

  Overall unit shipments declined slightly month over month in May, while ASPs rose sharply, indicating that pricing, particularly memory pricing, was an important driver of revenue acceleration.

• Seasonal Scenario AnalysisHistorical seasonal trend scenario

  Estimates full-year revenue assuming Q2, Q3, and Q4 growth rates follow historical seasonal trends.

  Even under the seasonal assumptions the report considers conservative, full-year industry sales could still grow by more than 90% year over year, reaching $1.5T-$1.6T.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Semiconductor industry

  Core research subject

  Strengths

  Sales grew significantly both year over year and month over month, with AI spending, cyclical improvement, and rising pricing reinforcing one another.

  Weaknesses

  Unit shipments in some categories performed below seasonal expectations month over month, and pricing contributed substantially to growth.

  Comparison

  The year-over-year growth rate of three-month rolling revenue in May improved significantly from April.

  Risks

  Excessively high memory prices, supply shortages, and pressure on consumer demand could weaken subsequent growth.

• Memory

  Major revenue and pricing driver

  Strengths

  DRAM and flash prices continued to rise sharply month over month in May, significantly boosting industry revenue.

  Weaknesses

  Rapid price increases could create pressure on downstream demand.

  Comparison

  Memory-related performance was materially stronger than the industry metric excluding memory.

  Risks

  High prices and tight supply could affect demand in consumer and client end markets.

• Suppliers of accelerated computing, memory, and networking

  Most direct beneficiaries of AI spending

  Strengths

  AI spending momentum is generating incremental demand, and the report considers these areas the most sensitive to new spending.

  Weaknesses

  They are heavily influenced by the pace of capital expenditures and supply-chain constraints.

  Comparison

  They have greater leverage to incremental AI spending than general cyclical semiconductor categories.

  Risks

  A slowdown in AI investment, customer budget adjustments, or supply bottlenecks could affect growth realization.

• Analog and MCUs

  Cyclical recovery categories to monitor

  Strengths

  Improving inventory conditions should support a gradual recovery in demand.

  Weaknesses

  Analog prices fell 3.5% month over month in May, while MCU prices fell 4.5%, with some performance weaker than typical seasonality.

  Comparison

  Near-term momentum is weaker than in memory and AI-related categories.

  Risks

  A slower-than-expected recovery in end demand could weigh on cyclical improvement.

Key data

• May industry sales year-over-year growth+119% Y/YThe figure was +34% Y/Y excluding memory.
• May industry sales month-over-month growth+16% M/MThe figure was +0.6% M/M excluding memory.
• Unit shipment performance-0.1% M/M，+21% Y/YThe metric refers to overall unit shipments excluding discrete components.
• Overall pricing performance+17% M/M，+85% Y/YThe year-over-year price increase rose further from +70% in March.
• DRAM pricing+14% M/MMemory pricing continued to improve significantly in May.
• flash pricing+26% M/MFlash pricing posted a strong increase in May.
• Three-month rolling semiconductor revenue+104% Y/YThe figure was +31% Y/Y excluding memory, improving further from April.
• 2026 industry sales forecast range$1.5T-$1.6TThis implies industry CAGRs of approximately 23% over five years and 16% over ten years.

Impact & implications

The report is broadly positive on the semiconductor sector, emphasizing AI capital spending and memory pricing as key drivers of upside to 2026 revenue. Suppliers exposed to accelerated computing, memory, and networking are viewed as the most direct beneficiaries; cyclical categories such as analog and MCUs should benefit from improving inventory conditions, although near-term performance remains differentiated. Investors should monitor whether excessively high memory prices and supply shortages suppress consumer electronics and client demand.

Risks

• Excessively high memory prices could suppress consumer electronics and client-related demand.
• Supply shortages could limit actual shipments and the realization of customer demand.
• Month-over-month unit shipments in some categories were below seasonal expectations, indicating that growth is not broad-based or balanced.
• The industry forecast depends on sustained AI spending and cyclical improvement; if capital expenditures or end demand weaken, revenue growth could fall short of expectations.

What to watch

• Whether subsequent monthly WSTS sales, unit shipment, and ASP data remain strong.
• Orders, backlog, customer expedites, and pricing commentary from semiconductor companies during the CQ2 earnings season.
• Whether rising DRAM and flash prices begin to suppress downstream demand.
• Whether non-memory categories such as analog, MCU, and MPU recover to or exceed historical seasonal trends.
• Incremental orders and supply constraints across the AI accelerated computing, networking, and memory supply chains.