On July 30, 2026, the Semiconductor Industry Association (SIA) released its latest report, showing that global semiconductor sales reached $162 billion in the second quarter of 2026, a year-on-year increase of 18.6% and a quarter-on-quarter increase of 4.2%, setting a new quarterly record. This figure significantly exceeded market expectations, signaling that the semiconductor industry is entering a robust recovery cycle after the inventory adjustments in 2025. AI chips have become the core growth engine. In terms of sub-sectors, AI-related chips were the biggest contributors to this growth. As global cloud computing giants continuously increase investment in AI infrastructure, the demand for GPUs, AI accelerators, and High Bandwidth Memory (HBM) remains booming. According to estimates from the semiconductor market research firm IC Insights, AI chip sales accounted for over 22% of total global semiconductor revenue in Q2 2026, an increase of nearly eight percentage points compared to the same period last year. Professor Zhiyuan Chen, Director of the Semiconductor Research Center at Nanyang Technological University in Singapore, stated, "AI is not a bubble, but a real demand for computing power." He added, "The cost of training and inferencing large models is rapidly decreasing, but the growth rate of computing power consumption is even faster, which directly drives the utilization rate of high-end processes and advanced packaging capacity." He further mentioned that the supply-demand gap for HBM widened in Q2, with the Q3 capacity of the three major memory manufacturers fully booked, and some customers even securing supply contracts for 2027. Consumer electronics and automotive electronics are recovering in tandem. Apart from AI, the recovery in the consumer electronics market provided a second engine for semiconductor growth. After two years of a downturn, the replacement cycle for smartphones and PCs has finally arrived, with global smartphone shipments growing by 7% and PC shipments growing by 5% in Q2 2026. Inventory levels at upstream chip manufacturers have reached a healthy level, and downstream brand manufacturers have begun actively restocking, leading to a comprehensive rebound in demand for logic chips, memory chips, and power management ICs. Automotive semiconductors also performed strongly, especially with the continuous increase in penetration of electric vehicles and intelligent driving. The new energy vehicle market in China exceeded 8 million units in the first half of 2026, a year-on-year increase of 32%, with the chip value per vehicle exceeding $1,000. Automotive chip giants such as NXP and Infineon have all raised their full-year earnings guidance and announced expansions in packaging and testing capacity in Malaysia and Singapore. Regional market performance: Singapore and Southeast Asia are highlights. From a regional distribution perspective, Southeast Asia's position in the global semiconductor landscape is becoming increasingly important. Data from the Economic Development Board of Singapore shows that semiconductor manufacturing output value in Singapore grew by 15.4% in the second quarter of 2026, with the packaging, testing, and equipment manufacturing segments showing the largest growth. As multiple international giants transfer advanced packaging and testing lines to Malaysia, Vietnam, and other locations, Southeast Asia is gradually becoming a key hub in the global semiconductor supply chain. The Semiconductor Industry Association of Singapore (SSIA) recently raised its full-year industry growth forecast from 10% to 14%, mainly based on the strong demand for AI chip packaging and hybrid bonding technology. Penang, Malaysia, has added several wafer fabrication support projects with a total investment exceeding 5 billion Ringgit, involving key materials such as wire bonding and substrates. The first 12-inch wafer fab in Vietnam is expected to start trial production in the fourth quarter of 2026, filling the country's gap in advanced processes. Inventory cycle reversal leads to optimized supply-demand structure. From an inventory cycle perspective, the industry underwent a period of intense inventory reduction in the second half of 2025, with original equipment manufacturers cutting capital expenditures and controlling production capacity. Entering 2026, the sudden surge in AI demand led to rapid inventory clearance, with some mature process products even facing shortages. For example, automotive MCUs and power management chips of 28nm and above have delivery lead times extended to over 30 weeks, with month-on-month price increases of 5%-8%. Analysts at the research institution Counterpoint point out that the current semiconductor industry is in the early stages of a new upcycle. Despite macroeconomic uncertainties, the structural growth driven by AI has long-term characteristics, and the boom is expected to last at least until 2027. However, the supply chain still needs to be wary of potential temporary oversupply caused by overly rapid capacity expansion, especially in the mature process sector. Industry Outlook: Strong Growth Maintained in the Second Half There is a general optimistic sentiment regarding the second half of 2026. TSMC predicted at its latest earnings call that third-quarter revenue will grow by 9%-11% month-on-month, with AI-related revenue expected to exceed 30% for the first time. In the memory chip sector, contract prices for DRAM and NAND Flash are expected to rise by 8% and 5% in Q3, respectively, leading to a significant improvement in original equipment manufacturer profitability. For the Singapore and Southeast Asian markets, both opportunities and challenges exist. On one hand, the demand for AI chip packaging and advanced packaging has brought a large number of high-end orders; on the other hand, talent shortages and geopolitical risks remain constraining factors. The Ministry of Trade and Industry in Singapore stated that it will continue to strengthen cooperation with global semiconductor giants, solidifying its position as a semiconductor innovation hub in Asia-Pacific through tax incentives and talent attraction programs. Overall, the semiconductor market data for the second quarter of 2026 laid a solid foundation for annual growth. The commercialization of AI technology, automotive intelligence, and the deepening global digital transformation are reshaping the future landscape of the semiconductor industry. For investors, grasping the three main trends—AI chips, memory price increases, and the shift of the Southeast Asian supply chain—will be key to participating in this industry cycle.
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