AI drives semiconductor equipment sales to USD $229.5bn

Global semiconductor manufacturing equipment sales are expected to reach USD $165.9 billion in 2026 and rise to USD $229.5 billion by 2028, according to SEMI.

The industry group's latest mid-year outlook points to a 23.2% increase in 2026 from the previous year, marking a fifth straight year of growth. Investment is being driven by demand tied to artificial intelligence, advanced logic, high-bandwidth memory, advanced packaging and newer chip production technologies.

Wafer fabrication equipment is expected to remain the market's largest segment, with spending forecast at USD $143.9 billion in 2026. Semiconductor test equipment is projected to grow 31% to USD $15.3 billion.

Assembly and packaging equipment is also expected to expand as chipmakers raise production to meet demand from AI-related computing, hyperscale data centres, automotive electronics and edge devices.

Ajit Manocha, President and Chief Executive Officer of SEMI, linked the rise in spending to shifts in chip demand.

"AI is accelerating demand for more powerful and efficient chips, driving increased investment across the semiconductor capital equipment market," Manocha said.

"The mid-year forecast points to a higher equipment spending trajectory as chipmakers invest in the leading-edge logic, advanced memory, test and packaging capabilities required for the AI era," he added.

India focus

The global investment cycle comes at an important point for India's semiconductor plans. India has approved 12 semiconductor manufacturing projects covering fabrication plants, assembly, testing, marking and packaging, outsourced semiconductor assembly and test sites, compound semiconductors and display manufacturing, with total planned investment of more than USD $20 billion.

SEMI also pointed to Indian policy measures, including the SEMICON India Programme, PLI, ECMS, EMC, RDI and the AI Mission, as part of a broader push to build a domestic semiconductor and electronics base.

Ashok Chandak, President of SEMI India, said the global trend matched India's national ambitions in chip manufacturing and supply chains.

"The strong global growth in semiconductor manufacturing equipment investment reflects the beginning of a new technology cycle powered by AI, advanced computing and intelligent electronics. For India, this momentum aligns perfectly with our national semiconductor mission. As India rapidly builds fabs, OSATs, display manufacturing and a robust ecosystem for equipment, materials and components, the country is becoming an increasingly attractive destination for global investments. This presents a significant opportunity not only for semiconductor manufacturing, but also for developing a strong domestic supply chain, fostering innovation, creating high-value jobs and integrating India more deeply into the global semiconductor value chain," Chandak said.

Spending is also being supported by continued investment in advanced memory technologies such as HBM, DRAM and NAND, alongside leading-edge logic manufacturing. At the same time, mature and specialty nodes remain important as demand holds up in automotive, industrial, power electronics, communications and consumer markets.

SEMI said this mix of advanced and mature technologies could create openings in India not only for chip plants but also for makers of equipment, materials, automation systems, precision engineering parts and related services.

Regional picture

By region, China, Taiwan and Korea are expected to remain the three largest destinations for semiconductor equipment spending through 2028. China is expected to keep the top position during the forecast period, although growth there is likely to slow in 2026 after several years of elevated investment.

In Taiwan, spending is being supported by new leading-edge capacity tied to AI and high-performance computing. In Korea, equipment demand is being driven by advanced memory production, including HBM.

Other regions covered by the forecast are expected to record spending increases in 2027 and 2028, supported by regionalisation efforts, government incentives and targeted expansion in specialty capacity.

The figures indicate that the current upcycle in semiconductor equipment is broadening beyond front-end fabrication alone, with testing and packaging drawing a larger share of investment as chipmakers respond to more complex designs and memory requirements.