Global semiconductor revenue set to hit 20-year high

Semiconductor revenue will skyrocket to more than $1.3 trillion globally this year – the highest growth rate in two decades.

That's according to forecasts from Gartner, which said the leap in semiconductor revenue is largely driven by demand from AI and data centers to power the technology.

Gartner said revenue will climb from $805 billion to $1.3 trillion in 2026 and $1.6 trillion in 2027.

"Amid high demand for AI processing, data center networking and power, and memory price inflation (memflation), the semiconductor industry is projected to achieve a third consecutive year of double-digit growth in 2026,” said Rajeev Rajput, Senior Principal Analyst at Gartner.

Rajput noted this is a milestone that “underscores the sector’s pivotal role in the AI technology stack”.

Memory shortages are also a key contributing factor, the consultancy found. RAM roughly doubled in price at the end of 2025, with the DDR5-6000 2x32GB memory kit tripling in price.

AI developers are spending heavily to build data center infrastructure to power the technology, and that's leading to a shortage of CPUs, GPUs, DRAM and storage for other uses.

Some manufacturers are already reporting that they've already sold their capacity for this year while others have stopped making hardware for other uses such as PCs or smartphones.

Higher demand, higher prices

Gartner said 30% of total semiconductor revenue in 2026 will come via AI semiconductors, with hyperscaler spending on AI infrastructure continuing to climb.

"Memflation will destroy, or at least delay, non-AI demand into 2028, to varying degrees depending on the application," said Rajput.

Of that $1.3 trillion in semiconductor revenue, half of it will now be made up of memory, a significant leap from previous years, with memory revenue up threefold. DRAM and NAND flash prices will continue to climb with no meaningful pricing relief until late 2027, the company predicted.

"Technology suppliers should prepare for higher prices during the first half of 2026, followed by persistent but moderating price increases throughout the rest of the year," said Rajput. "CIOs and IT leaders should be cautious about signing supply agreements with unfavourable pricing terms that extend beyond 2027."

Gartner’s figures come hot on the heels of similar projections from IDC last month, which found server market sales had hit record levels.

The consultancy recorded an 80% increase in sales, again largely due to continued AI infrastructure roll-outs.

However, the high costs of key components, including DRAM, GPUs, and SSDs, were causing cost concerns, with companies seeking to lock down prices now in advance of further pricing pressures this year and next.

"We are going to see more price pressures, and that may impact on market dynamics with less units but higher average selling prices going forward," noted Juan Seminara, IDC's research director of Worldwide Enterprise Infrastructure Trackers.

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