In-Depth Analysis of the Semiconductor Market in September 2026: AI Demand Continues to Diverge, Foundry and Packaging & Testing Enter a New Cycle

In-Depth Analysis of the Semiconductor Market in September 2026: AI Demand Continues to Diverge, Foundry and Packaging & Testing Enter a New Cycle

As the third quarter of 2026 progresses, the global semiconductor market exhibits a complex and diverse development landscape. Driven by the ongoing AI wave, the chip industry is undergoing unprecedented structural changes. This article, based on the latest market data, will delve into the core trends, key drivers, and future directions of the current semiconductor market, providing comprehensive market insights for industry participants.

I. Divergence in AI Chip Demand: A Tale of Two Markets—High-End vs. Low-End

In 2026, the explosive growth of AI technology continues to be the main driver of the semiconductor industry. However, unlike the widespread prosperity expected at the beginning of the year, the current AI chip market shows a clear divergence trend. Demand for high-end AI training chips remains strong, while the edge AI and inference chip markets face inventory pressure.

According to data from industry research institutions, global AI chip sales in the second quarter of 2026 increased by 32% year-on-year, reaching a record $28 billion. Among them, high-end training chips from manufacturers like NVIDIA and AMD are in short supply, with orders extending to 2027. This demand mainly comes from large cloud service providers and AI research institutions, which are accelerating the construction of larger-scale AI infrastructure.

Meanwhile, the edge AI chip market is experiencing inventory accumulation. Multiple analysis agencies point out that due to overly optimistic forecasts earlier leading to rapid capacity expansion, coupled with some application scenarios not meeting expectations, the inventory level of edge AI chips has risen to the warning line. This divergence reflects the maturity differences of AI technology at different application levels and also indicates that the market is transitioning from frenzy to rationality.

For Singapore, as a globally important semiconductor manufacturing and packaging & testing base, this divergence trend brings new opportunities and challenges. On one hand, Singaporean enterprises can focus on the manufacturing and packaging & testing of high-end AI chips, leveraging their advantages in advanced packaging technology; on the other hand, they also need to be alert to the volatility risks of the low-end AI chip market.

II. Foundry Market: Mature Process Nodes Rebound, Advanced Process Competition Intensifies

As a core link in the semiconductor industry chain, the foundry market's trend directly reflects the overall health of the industry. In September 2026, the foundry market presents a complex situation of mature process nodes rebounding and advanced process competition intensifying.

In the mature process domain, with the recovery of traditional applications such as automotive electronics and industrial control, as well as the continuous growth of IoT devices, the capacity utilization of 28nm and above process nodes has significantly increased. Multiple foundry manufacturers report that the capacity utilization of their mature process lines has reached over 85%, with some even approaching full load. This rebound is mainly due to the following factors:

• Stable growth in automotive chip demand, especially with the rapid development of electric vehicles and autonomous driving technology
• Continuous advancement of industrial automation and smart manufacturing
• Proliferation of IoT devices, especially smart home and wearable devices
• Shortening of the replacement cycle for traditional consumer electronics

In sharp contrast, competition in the advanced process field is becoming increasingly fierce. The risk of overcapacity in 7nm and below process nodes is emerging, mainly due to the demand growth of some application scenarios falling short of expectations and the capacity expansion of new entrants. This competition is reflected not only at the technical level but also in pricing strategies. Some foundry manufacturers are starting to offer more competitive pricing to compete for limited customer resources.

Singapore's foundry enterprises, such as GlobalFoundries Singapore, are actively adjusting their capacity structure, increasing investment in mature processes while maintaining R&D investment in advanced process technology. This strategy helps maintain competitiveness in the current market environment while reducing risks.

III. Packaging & Testing Industry: Price Revaluation Cycle Begins, Technology Upgrades Drive Growth

As an important link in the semiconductor industry chain, the packaging & testing market often lags behind wafer manufacturing but is also affected by industry cycles. In the second half of 2026, the packaging & testing industry is entering a price revaluation cycle, with technology upgrades becoming the main driver of growth.

As the complexity of AI chips continues to increase, the demand for advanced packaging technology is growing. Advanced packaging solutions such as 2.5D/3D packaging and Chiplet have become market hotspots. These technologies can improve chip performance, reduce power consumption, and meet the high requirements of AI applications. Singapore's packaging & testing enterprises, such as STATS ChipPAC, are actively deploying these advanced packaging technologies to seize market opportunities.

In terms of pricing, traditional packaging services still face price pressure, but the prices of advanced packaging services are on the rise. This divergence reflects the market's recognition of technological value-added and also indicates that the packaging & testing industry is transitioning from labor-intensive to technology-intensive.

Notably, the capacity utilization of the packaging & testing industry also shows a divergence trend. Advanced packaging capacity utilization is relatively high, while traditional packaging capacity is relatively oversupplied. This pattern prompts packaging & testing enterprises to accelerate technology upgrades and capacity structure adjustments to adapt to changes in market demand.

IV. Supply Chain Dynamics: Regionalization and Globalization Coexist

The geographical distribution of the semiconductor supply chain is undergoing profound changes, with the coexistence of regionalization and globalization becoming a key feature. On one hand, governments worldwide continue to promote domestic semiconductor industry development and strengthen supply chain security; on the other hand, global division of labor still exists, especially in high-end technology fields.

As a core node in the Southeast Asian semiconductor supply chain, Singapore's strategic position is becoming increasingly prominent. Continuous investment by international giants like Micron and GlobalFoundries in Singapore, along with the technology upgrades of local enterprises, makes Singapore an important part of the global semiconductor supply chain. This position is reflected not only in the manufacturing segment but also in R&D and design fields.

Meanwhile, Asian countries such as China and South Korea are also strengthening their semiconductor industry chains, forming a regional competitive landscape. This competition has promoted technological innovation and cost optimization to some extent but has also brought the need for supply chain diversification.

For investors, paying attention to the regionalization trend of the supply chain and enterprises' regional layout strategies has become an important dimension for evaluating investment value. Those enterprises that can establish strong supply chains in multiple regions usually have better risk resistance capabilities.

V. Future Outlook: Dual Challenges of Technology-Driven and Market Adjustment

Looking ahead, the semiconductor market will continue to be influenced by both technology-driven and market adjustment factors. Emerging technologies such as AI, 5G/6G, and IoT will continue to drive chip demand growth, but market adjustments and intensified competition will also bring challenges.

At the technical level, new technologies such as Chiplet, advanced packaging, and RISC-V will become important development directions. These technologies can not only improve chip performance but also reduce costs and meet diverse needs. The technical accumulation and innovation capabilities of Singaporean enterprises in these fields will determine their competitiveness in the future market.

At the market level, adjustments to supply-demand balance will continue. The high-end chip market may remain tight, while the mid-to-low-end market faces the risk of overcapacity. This imbalance will prompt enterprises to focus more on product differentiation and technological innovation to stand out in competition.

For Singapore's semiconductor industry, seizing the opportunities of AI technology development while addressing the challenges of market adjustment will be key to future development. Through technological innovation, capacity optimization, and supply chain diversification, Singapore is expected to maintain a leading position in the new semiconductor cycle.

VI. Investment Strategy Recommendations

Based on the current market analysis, investors may consider the following strategies:

• Focus on Technology Leaders: Enterprises with technological advantages in fields like AI chips and advanced packaging are likely to gain a favorable position in competition
• Balanced Product Portfolio: Maintain an appropriate balance between high-end and low-end markets to reduce risks from single-market fluctuations
• Emphasize Regional Layout: Pay attention to enterprises' market position and supply chain layout in key regions
• Prioritize Cost Control: In a fiercely competitive market environment, cost control capabilities will become an important competitive advantage
• Long-Term Investment Perspective: The semiconductor industry has obvious cyclical characteristics, requiring a long-term investment perspective to avoid the impact of short-term fluctuations

In summary, the semiconductor market in September 2026 presents a complex and diverse development landscape. The divergence of AI demand, adjustments in the foundry market, and technological upgrades in the packaging & testing industry together constitute the main features of the current market. For industry participants and investors, deeply understanding these trends and formulating corresponding strategies will be key to addressing challenges and seizing opportunities.