In September 2026, the global semiconductor industry is undergoing a profound inventory cycle adjustment, driven by the continuous surge in AI. Unlike the inventory correction in the second half of 2025, the current market exhibits characteristics of a "differentiated recovery": demand for data center AI chips remains robust, leading to a stabilization and rebound in mature process wafer prices; while consumer electronics chip inventory has decreased to low levels, weak demand recovery keeps the utilization rate of advanced process capacity low. As a core hub in the Southeast Asian semiconductor supply chain, Singapore serves as a critical observation window for this cyclical shift, thanks to its comprehensive industry chain layout and policy support. Signals such as wafer fabrication utilization reaching a two-year high, packaging and testing enterprises preparing price adjustments, and a general strengthening of material prices all point to one conclusion—the semiconductor industry is transitioning from "inventory reduction" to "inventory replenishment," and the price revaluation cycle has begun.
I. AI Demand Divergence: The "Ice and Fire" of Data Centers and Consumer Electronics
The explosive growth of AI technology is the core driver of this semiconductor cycle recovery, but demand divergence is intensifying. According to market research firm data, in the second quarter of 2026, global AI chip sales increased by 35% year-on-year, with data center AI chips accounting for over 60%. Manufacturers represented by Nvidia and AMD continue to have full orders for high-end GPUs and AI accelerators, keeping related wafer fabrication capacity fully utilized. In contrast, consumer electronics chip demand is sluggish: smartphone shipments declined by 8% year-on-year, and the PC market is also in recession, resulting in low inventory levels for mid-to-low-end chips, but slow demand recovery.
This divergence is particularly evident in the Singapore market. Singapore's foundries primarily focus on mature processes (such as 28nm, 40nm) and specialty processes (such as power semiconductors, image sensors), with this capacity mainly serving the needs of data center AI chips, automotive electronics, and industrial control. Advanced process capacity (such as 7nm and below) is relatively limited, mainly serving consumer electronics chips. Therefore, the utilization rate of mature process wafers has been rising for three consecutive months, while the utilization rate of advanced process capacity remains below 70%.
1. Data Center AI Chips: Sustained Strong Demand
Data centers are the primary application scenario for AI chips. With the increasing demand for large model training and inference, cloud service providers (such as Amazon AWS, Microsoft Azure, Google Cloud) are continuously increasing their procurement of AI chips. GPUs, represented by Nvidia H100 and A100, have orders extending into 2027, leading to a supply shortage in related wafer fabrication capacity. TSMC foundries in Singapore (located in Changi) primarily produce the wafers for these GPUs, with utilization rates exceeding 95%, reaching a high in nearly three years.
Furthermore, the stacking demand for AI chips has driven the upgrade of packaging technology. Hybrid Bonding technology has become a hot topic, with packaging and testing enterprises in Singapore, such as STATS ChipPAC, increasing investment in this technology to meet the high-density packaging requirements of AI chips.
2. Consumer Electronics Chips: Inventory Bottoms Out but Demand is Weak
The recovery in demand for consumer electronics chips is sluggish, leading to inventory levels remaining low. In August 2026, the global smartphone chip inventory turnover day was 45 days, below the normal range (50-60 days), but shipments decreased by 10% year-on-year. The PC chip inventory turnover day was 52 days, also below the normal range, but there was no significant rebound in demand. This phenomenon of "bottomed inventory but weak demand" has kept advanced process wafer prices on a downward trend.
UMC's wafer fabrication plant in Singapore primarily produces consumer electronics chips, with its advanced process capacity utilization at only 68%, below the industry average (75%). To cope with weak demand, UMC has announced an adjustment to its production structure, increasing the proportion of mature process capacity to meet the demand for AI chips.
II. Inventory Cycle Reversal: Key Signals from "De-stocking" to "Re-stocking"
The inventory cycle is a crucial indicator in the semiconductor industry, typically divided into four stages: de-stocking, re-stocking, re-re-stocking, and de-stocking. In the second half of 2025, the global semiconductor industry was in a de-stocking phase, with inventory turnover days rising from 65 days in June 2025 to 78 days in December 2025. In the second quarter of 2026, inventory turnover days began to decline, dropping to 72 days in August 2026, marking the start of the re-stocking phase.
Inventory data from the Singapore market also confirms this trend. In August 2026, the inventory turnover days for semiconductor companies in Singapore were 70 days, a decrease of 8 days from December 2025. Specifically, the inventory turnover days for wafer fabs dropped from 85 days to 75 days, and for OSATs, it decreased from 60 days to 55 days. This indicates that companies are increasing inventory to meet future demand growth.
1. Wafer Fab Capacity Utilization: Mature Processes at Full Capacity, Advanced Processes Rebounding
Capacity utilization is an important indicator of the inventory cycle. In September 2026, the overall capacity utilization of wafer fabs in Singapore reached 82%, an increase of 7 percentage points from 75% in December 2025. Within this, the capacity utilization of mature processes (28nm and above) reached 95%, while the capacity utilization of advanced processes (7nm and below) reached 68%, an increase of 8 percentage points from 60% in December 2025.
The main reason for the increase in mature process capacity utilization is the strong demand for AI chips. Taking TSMC's Singapore fab as an example, its 28nm wafer capacity utilization has reached 100% for three consecutive months, with orders scheduled until 2027. The rebound in advanced process capacity utilization is due to the bottoming out of consumer electronics chip inventory, prompting companies to begin purchasing in small increments.
2. OSATs: Preparing Price Adjustments to Counter Rising Costs
OSATs are a vital link in the semiconductor industry chain, and their price trends reflect the industry's vitality. In September 2026, OSATs in Singapore (such as ASE and Amkor) are preparing price adjustments, with an expected increase in packaging prices of 5%-8% in the fourth quarter. The main reasons for the price adjustment are rising material costs (such as silicon wafers and packaging substrates) and increased capacity utilization.
ASE, as Singapore's largest OSAT, has seen its packaging prices rise for three consecutive months. The company stated that due to the increased stacking requirements for AI chips, the cost of hybrid bonding technology has risen, necessitating a price increase to maintain profitability. Amkor also indicated that its packaging prices will be adjusted in line with increased capacity utilization, with an expected increase of 6% in the fourth quarter.
III. Wafer Price Trends: Mature Processes Stabilizing and Rebounding, Advanced Processes Stable
Wafer prices are a key indicator of the semiconductor market. In September 2026, global wafer prices showed a trend of "stabilization and rebound in mature processes, and stability in advanced processes." According to market data, the price of 28nm wafers rose by 3% compared to December 2025, the price of 40nm wafers rose by 5%, while the price of 7nm wafers remained stable (a 1% decrease compared to December 2025).
Wafer price trends in the Singapore market are consistent with the global trend. The price of 28nm wafers at TSMC Singapore increased by 4% compared to December 2025, and the price of 40nm wafers increased by 6%, while the price of 7nm wafers remained stable. The price of 28nm wafers at United Microelectronics Corporation Singapore increased by 3% compared to December 2025, the price of 40nm wafers increased by 5%, and the price of 7nm wafers decreased by 2%.
1. Mature Processes: AI Chip Demand Drives Price Increase
The main reason for the stabilization and rebound in mature process wafer prices is the strong demand for AI chips. Data center AI chips primarily use 28nm and 40nm wafers, and the increased demand for these wafers has led to price increases. Furthermore, the limited capacity of mature process wafers and tight supply are also contributing factors to the price rise.
Taking TSMC Singapore as an example, orders for its 28nm wafers are scheduled until 2027, with a capacity utilization rate of 100%, necessitating a price increase. United Microelectronics Corporation Singapore faces a similar situation, with a 40nm wafer capacity utilization rate of 95%, leading to a 5% price increase compared to December 2025.
2. Advanced Processes: Weak Consumer Electronics Demand Leads to Price Stability
The primary reason for the stable price of advanced process wafers is the weak demand from consumer electronics. Smartphones and PC chips mainly use 7nm and below wafers, and the decline in demand for these chips has resulted in stable prices. Additionally, the oversupply of advanced process wafers is one of the reasons for the price stability.
The capacity utilization rate of 7nm wafers at United Microelectronics Corporation Singapore is only 68%, making it difficult for the price to rise. The capacity utilization rate of 7nm wafers at TSMC Singapore is also only 75%, leading to a 1% decrease in price compared to December 2025.
IV. Opportunities and Challenges in the Singapore Supply Chain
As a core of the Southeast Asian semiconductor supply chain, Singapore's advantages lie in its complete industry chain layout and policy support. In 2026, the Singapore government launched the "Semiconductor Industry Upgrade Plan," investing S$10 billion to support the development of wafer fabrication plants, packaging and testing enterprises, and material suppliers. Moreover, Singapore's excellent geographical location, close to major Asian markets (such as China, India, and Southeast Asia), facilitates logistics and supply chain management.
1. Opportunities: AI Chip Demand and Capacity Expansion
The strong demand for AI chips presents opportunities for the Singapore supply chain. Wafer manufacturers such as TSMC and United Microelectronics Corporation are expanding capacity in Singapore to meet the needs of AI chips. For instance, TSMC plans to invest S$20 billion in Singapore to expand its 28nm wafer fabrication plant, expected to commence production in 2027. United Microelectronics Corporation also plans to invest S$10 billion in Singapore to expand its 40nm wafer fabrication plant, expected to commence production in 2026.
Packaging and testing enterprises are also expanding capacity in Singapore. ASE Technology plans to invest S$5 billion in Singapore to expand its hybrid bonding packaging capacity, expected to commence production in 2027. Amkor Technology also plans to invest S$3 billion in Singapore to expand its advanced packaging capacity, expected to commence production in 2026.
2. Challenges: Talent Shortage and Rising Costs The main challenges facing the Singaporean supply chain are talent shortages and rising costs. The semiconductor industry requires a large number of high-quality talents, including wafer engineers, packaging engineers, and materials scientists. However, Singapore has an insufficient supply of semiconductor talent, making it difficult for companies to recruit suitable personnel. Furthermore, high labor costs in Singapore lead to increased corporate expenses.
To address the talent shortage, the Singaporean government has launched the "Semiconductor Talent Programme," offering scholarships and training programs to attract overseas talent. In addition, companies are collaborating with universities such as the National University of Singapore and Nanyang Technological University to cultivate semiconductor talent. For example, TSMC partners with the National University of Singapore to offer Master's programs in wafer engineering to train wafer engineers.
V. Investment Strategy Recommendations: Focusing on Inventory Cycles and Price Revaluation
For investors, the current investment strategy in the semiconductor industry should focus on inventory cycles and price revaluation. Here are three key recommendations:
Strong focus on mature process wafer fabrication companies: Demand for mature process wafers is robust, and prices are stabilizing and rebounding, leading to improved performance for related companies (such as TSMC and United Microelectronics Corp).
Focus on packaging and testing companies: Packaging and testing companies are preparing price adjustments and increasing capacity utilization, which will improve their performance. Companies like ASE and Amkor are worth watching.
Focus on material suppliers: The prices of wafer materials (such as silicon wafers and packaging substrates) are rising, leading to improved performance for related companies (such as Shin-Etsu Chemical and ASE).
Furthermore, investors should pay attention to investment opportunities in the Singapore market. Semiconductor companies in Singapore (such as TSMC Singapore and ASE) are benefiting from the growing demand for AI chips and capacity expansion, with expected performance improvements. At the same time, government support policies in Singapore provide a favorable development environment for these companies.
Conclusion
In September 2026, the global semiconductor market is entering a price revaluation cycle, driven by the dual factors of AI demand differentiation and inventory cycle reversal. As a core of the Southeast Asian semiconductor supply chain, Singapore's wafer fabrication capacity utilization has reached a two-year high, and packaging and testing companies are preparing price adjustments, signaling a new development opportunity for the industry. Investors should pay attention to inventory cycle changes, the trends in wafer and packaging prices, and investment opportunities in the Singapore market to capture the gains from this cyclical shift.
