Semiconductor equipment sales to hit $166B in 2026, SEMI says

Key Takeaways

• Global semiconductor equipment sales projected to reach record $165.9 billion in 2026, a 23.2% increase
• AI infrastructure spending and high-bandwidth memory investment are primary growth drivers
• India positioned to capture mature node demand as global firms race for cutting-edge capacity

Global semiconductor manufacturing equipment sales will hit a record $165.9 billion in 2026, up 23.2% from 2025, according to SEMI's mid-year forecast released Tuesday. The industry body expects sales to climb further to $229.5 billion by 2028, marking five straight years of growth fueled almost entirely by AI chip demand.

The numbers tell a straightforward story: foundries and memory makers are spending heavily to build capacity for AI workloads, and equipment vendors are the direct beneficiaries. SEMI attributes the surge to investment in leading-edge logic, advanced memory technologies, and back-end packaging needed for higher compute density.

What's driving the 23% jump in equipment spending?

Three factors dominate the outlook. First, AI infrastructure buildout requires bleeding-edge chips, and those chips require the latest extreme ultraviolet lithography tools. Second, high-bandwidth memory (HBM) production is expanding rapidly to feed GPU demand from hyperscalers. Third, advanced packaging techniques that stack memory and logic together need new back-end equipment lines.

China, Taiwan, and South Korea will remain the top three destinations for equipment spending through 2028. China holds the lead, though SEMI expects its growth to moderate in 2026 after several years of elevated investment. Taiwan's spending supports leading-edge capacity builds for AI and high-performance computing. Korea's outlay goes primarily toward advanced memory, especially HBM.

Where India fits in the equipment boom

India is not chasing 3nm or 2nm fabs. That's intentional, and it may be strategically sound. Ashok Chandak, president of the India Electronics and Semiconductor Association (IESA), told the Economic Times that Indian facilities are focused on traditional or mature nodes, 28nm and above. These older processes are cheaper to build, highly stable, and well-suited for automotive, industrial, and power applications.

"Globally, firms are racing to develop cutting-edge semiconductor technologies. India is sitting on a sweet spot where all the operational and upcoming semiconductor facilities in the country have focused on traditional or conventional semiconductors," Chandak said. "This will result in these plants getting an assured market, helping them get established."

Under the India Semiconductor Mission, 12 units have been approved with cumulative investments around Rs 1.64 lakh crore ($19.5 billion). These include Tata's Rs 91,000 crore fab in Dholera and several assembly, testing, marking, and packaging (ATMP) facilities. Three outsourced semiconductor assembly and test (OSAT) plants have already begun production in Gujarat's Sanand district, including Micron Technology's Rs 22,500 crore facility and Kaynes Semicon's Rs 3,300 crore plant.

Cutting-edge vs. mature nodes: different markets, different economics

The distinction matters for anyone tracking semiconductor supply chains. Cutting-edge nodes (3nm, 2nm) pack billions of transistors into tiny spaces using extreme ultraviolet lithography. Only TSMC, Samsung, and Intel can produce them at scale. These chips power AI accelerators, flagship smartphones, and data center processors.

Mature nodes (28nm and above) use older lithography tools that cost less to operate. They produce chips for cars, appliances, industrial controllers, and power management. Demand here is steady, less cyclical, and growing as more devices become connected. India's bet is that the global scramble for leading-edge capacity leaves mature-node supply constrained, creating an opening for new entrants.

Regional shifts and government incentives

SEMI expects equipment spending to increase in other regions over the next two years due to regionalization efforts, government incentives, and targeted specialty capacity expansions. The U.S. CHIPS Act, European Chips Act, and similar programs in Japan and India are all pulling investment away from the traditional East Asian concentration.

This geographic diversification is a response to supply chain risks exposed during the pandemic and ongoing geopolitical tensions. But building new fabs outside established hubs comes with higher costs and longer ramp times. The equipment spending surge assumes these projects move forward on schedule, which history suggests is optimistic.

What could derail the forecast?

SEMI's projections assume AI spending continues at current rates. A pullback in hyperscaler capex, a slowdown in enterprise AI adoption, or inventory corrections in the memory market could all compress the 2026-2028 trajectory. Export controls on advanced equipment to China add another variable. If restrictions tighten, equipment demand in China could fall faster than SEMI's moderate-growth assumption.

The counter-argument: AI demand has surprised to the upside for two years running. NVIDIA's data center revenue quintupled between 2022 and 2024. As long as the AI training race continues, chip demand, and by extension equipment demand, remains structurally elevated.

Frequently Asked Questions

How much will semiconductor equipment sales grow in 2026?

SEMI forecasts global semiconductor equipment sales will reach $165.9 billion in 2026, a 23.2% increase from 2025.

Which countries spend the most on semiconductor equipment?

China, Taiwan, and South Korea are the top three destinations for equipment spending through 2028, with China holding the lead.

Why is AI driving semiconductor equipment demand?

AI chips require leading-edge manufacturing processes and high-bandwidth memory, both of which need substantial new equipment investment from foundries and memory makers.

What semiconductors is India focused on producing?

India is targeting mature and specialty nodes at 28nm and above, rather than cutting-edge 3nm or 2nm processes, through its India Semiconductor Mission.

How much has India invested in semiconductor facilities?

Under the India Semiconductor Mission, 12 units have been approved with cumulative investments of approximately Rs 1.64 lakh crore ($19.5 billion).

Source: Tech-Economic Times / ET