Gartner’s latest forecast shines a light on the global semiconductor market’s wild expansion. Revenues are expected to hit $1.3 trillion in 2026, with even more growth likely in 2027.
This would be the strongest upswing in two decades. AI and data-center demand are the big drivers, while memory prices and supply headaches are changing how companies buy silicon and systems.
What Gartner’s Forecast Signals for the Global Chip Market
The forecast points to a shift toward higher-value components and AI-enabled silicon. Memory is right at the center of this revenue mix.
Still, Gartner warns that tight supply and price swings could slow non-AI demand. The market seems set to keep prioritizing AI infrastructure through 2027.
Key Growth Engines
Gartner calls out four main engines that’ll push semiconductor revenue higher in the mid-2020s:
- AI processing demand—accelerators and specialized chips are powering training and inference in hyperscale data centers.
- Data-center networking—the backbone that keeps AI workloads moving smoothly.
- Power and thermal efficiency improvements—chips are squeezing out more performance per watt in dense deployments.
- Memory price inflation—“memflation” is a huge force, affecting pricing and supply strategies all over the place.
Memory could make up about half of the $1.3 trillion in 2026 revenue. RAM and storage are shaping the market’s path, even as AI boosts demand for other types of silicon.
Memory Market at the Center of Growth
Memory is set to be a dominant contributor to 2026 revenues. DRAM and NAND flash are critical for AI systems, servers, and edge devices.
The memory segment is on track for a big year-over-year jump. AI deployments need high-bandwidth, low-latency memory in massive infrastructures.
Memflation: Pricing Dynamics and Impacts
The memory market’s seen sharp price swings lately. DRAM and NAND prices have shot up.
By late 2025, RAM prices have almost doubled. Some DDR5 kits have seen prices spike into triple digits, which is causing trouble for segments that depend on memory chips.
- These price jumps are squeezing margins in non-AI segments. Customers are focusing more on AI-ready configurations.
- Manufacturers say they’ve sold out their AI hardware capacity this year. Some are shifting production away from PCs and smartphones to chase AI demand.
- Analysts think “memflation” could hold back non-AI demand through 2028, though the impact will differ across industries.
Supply Constraints and Production Shifts
It’s not just memory—the whole supply environment is getting tighter. Capacity bottlenecks for AI accelerators and related systems are sparking a tug-of-war for silicon.
Data centers, cloud providers, and enterprise IT budgets are all feeling the pressure.
- AI hardware demand is driving suppliers to reallocate manufacturing capacity. Some are even pausing non-AI production lines to keep up with AI workloads.
- Markets like PCs and mobile devices now face a bigger risk of supply shortages and price swings.
Strategic Guidance for CIOs and IT Leaders
With all this uncertainty, Gartner and others urge CIOs to rethink their long-term procurement strategies. Flexibility, diversification, and risk management are the watchwords if you want to avoid getting burned by price shocks or supply gaps.
- Don’t lock into long-term supply agreements beyond 2027 unless the pricing terms make sense.
- Go for modular, scalable procurement, so you can switch between AI-focused and traditional workloads as things change.
- Keep a close eye on the memory market—memory costs and availability can swing your entire system budget.
IDC’s Server Market Outlook
IDC’s industry data backs up Gartner’s view. Server sales have jumped about 80%, thanks to the rush for AI infrastructure.
This raises real concerns about component costs and how realistic rapid hardware refresh cycles are, especially with average selling prices climbing due to tight supply.
What to Watch Through 2026–2027
The semiconductor world keeps leaning into AI-powered systems. Memory pricing and capacity limits are really shaping where the money goes right now.
Revenue forecasts look strong, but CIOs and engineers shouldn’t get too comfortable. Memory prices and supply will probably stay unpredictable for a while.
In the next few years, expect fewer AI orders, but they’ll be bigger. People will need to manage BOMs more carefully, and supply chain resilience is going to matter even more as we all try to handle memflation and the shifting demands of AI workloads.
Here is the source article for this story: Global semiconductor revenue set to hit 20-year high