Global chip boom on the horizon

The global semiconductor industry is bracing for a dramatic expansion, with revenue expected to reach $1.6 trillion in 2026, a 92 per cent jump from the $809 billion recorded in 2025, according to Gartner. The research firm forecasts further growth to $1.9 trillion in 2027. The surge is being driven primarily by sustained investment in AI infrastructure and a stronger-than-anticipated memory pricing cycle, said Ben Lee, Director Analyst at Gartner.

"The pace of the semiconductor industry expansion is accelerating dramatically," Lee said, adding that as AI infrastructure scales, it is "reshaping investment across the semiconductor ecosystem and redefining the industry's application mix."

A key structural shift underpinning this growth: AI data centres are expected to account for 36.5% of global semiconductor revenue in 2026 and more than 53% by 2030.

Memory becomes the biggest chunk

Memory is emerging as the dominant driver of the industry's expansion. Gartner forecasts memory revenue will total $837 billion in 2026, accounting for 54% of all semiconductor revenue, up from 27% in 2025. Memory revenue is projected to surpass $1 trillion in 2027.

The growth is steep: DRAM revenue is forecast to increase 246.6% in 2026, while NAND flash revenue is expected to grow 371.9%. Although additional capacity is expected to enter the market in 2027, supply-demand conditions are projected to remain tight as AI infrastructure deployments continue to increase memory consumption.

"AI infrastructure has fundamentally changed the dynamics of the memory market," said Shrish Pant, Director Analyst at Gartner. "Pricing expansion is accelerating growth in 2026, and continued AI infrastructure deployments, higher memory content per AI server and sustained demand for high-bandwidth memory will support memory revenue growth through 2027 and beyond."

As AI clusters become larger, faster and more power-intensive, they require increasing investment in CPUs, networking silicon, power management, analog devices, and optical interconnect technologies.

Excluding memory, semiconductor revenue is forecast to grow from $589 billion in 2025 to $718 billion in 2026, a 21.9% increase, and reach $864 billion in 2027, as reported by The Hindu Business Line.

India's role in the global chip demand

While India's share of the global AI data-centre capacity will remain relatively small, the country's AI data-centre expansion could account for as much as 5% of global semiconductor demand by 2030, according to Gartner. Analysts expect hyperscalers and data-centre companies to continue investing in India, helped by relatively economical power and a large digital user base. However, India is unlikely to take a double-digit share of global AI data-centre capacity.

"India AI data centre is a big growth story over a rather small base," said Shrish Pant, Director Analyst at Gartner.

A memory price crunch could raise device prices

The memory price surge is expected to have a direct cascading effect on consumer electronics. Memory and storage now account for more than half of the bill of materials for smartphones and PCs. A typical 8GB RAM + 256GB storage configuration already costs more than $150 in component costs.

Gartner forecasts that smartphone and PC prices could rise by 20% to 30% in response. As a result, entry-level and mid-range device shipments could decline by more than 20% as consumers delay upgrades or opt for refurbished options. Premium devices are expected to fare better, as manufacturers struggle to protect margins at the lower end. Apple could have an advantage thanks to its vertical integration and unified memory architecture, which requires less RAM.

Shrish Pant said, "In an age of one-device AI where models run natively on smartphones, who would've imagined in late 2025, we would consider a 4 GB smartphone at Rs 20,000."

PC margins are also under pressure, particularly for products priced below $600, as competition remains fierce.

The AI buildout thus creates a certain paradox for India: the country is building AI infrastructure to help drive global chip demand, but its consumers are facing rising device costs due to memory inflation.