We are pleased to share the Future Horizons Semiconductor June update.
You can find the latest industry information below:
Executive Summary
The June WSTS report had April’s total semiconductor sales up 106.3 percent compared to April 2025. Month-on-month sales were also up 22.3 percent compared to an 8.5 percent decline last month.
To say the chip market is booming in any way is an understatement, with the current annual growth rate double that recorded in the mid-1990s or early 2000s dot com boom. However, it can also be an oversimplification and can be misleading.
The current eye-watering 106.3 percent growth is driven by ICs, up 121.9 percent, especially Memory, up 359.1 percent, and Logic, up 48.6 percent, each driven by one market trend, the white-hot AI-datacenter boom.
In stark contrast, IC growth excluding Memory was just 38.4 percent, Analog up 17.2 percent and Micro up 26.2 percent. And in the non-IC sectors, Opto rose 7.2 percent and Discretes rose 13.5 percent.
Even more disturbingly, growth is driven by ASPs, not unit demand. This, we believe, makes current growth rates unsustainable and a correction of the river inevitable.
For now we are a little out and alone with this idea; indeed, the euphoria of the general market shows the opposite, calling for several more years of uninterrupted market growth, driven by the brave new world of AI, which shows no sign of slowing down.
Such an extended bull run would be unprecedented in the industry’s 70-year history, which is even more surprising given the sluggish global economy.
Increased market growth is often combined, and is driven by strong GDP growth resulting in market-based demand and supply-related shortages.
Only time will tell if our cautionary opinion is correct but if we are wrong, we will be the first to admit it and you will be the first to read about it here.
Market Outlook
April 2026 marked the 32nd consecutive month of positive year-over-year growth making it the second-longest growth period on record, behind only the 35-month period of June 2002-May 2005 for the longest period of growth.
The key difference, however, between this acceleration and all previous increases, is the fact that it is driven by ASP and not based on strong growth in unit shipments.
It was also driven by a single, highly specialized market sector, namely AI data centers, and their associated demand for Logic, GPU and Memory, which is equally unique. It has not been driven by a strong economic recovery or broad demand growth.
The broad based product sectors of Discretes, Analog, Micro, Opto and Sensor and the non-AI data markets are all yet to recover.
Meanwhile, the great desire of the ‘heart against the head’ and the deep pockets investors have to finance the infrastructure of the data center and computing power needed by powerful AI companies such as Anthropic, OpenAI and Meta show no signs of slowing down, as shown by Apollo and Blackstone’s recently announced project, “Big Sky”, which is the largest private debt deal of $35.
However, despite the magnitude of these current investment plans, according to Goldman Sachs, even the planned $765 billion spent on AI data centers this year is just the tip of the iceberg, a tenth of the total they estimate is needed by 2031.
On the other hand, Anthropic reported an increase in revenue, driven by the success of the use of AI in coding, giving rise to the belief that the same type of AI agents writing software today will quickly enter other types of white-collar work.
Whether this wave will lift all companies equally or whether they can serve the needs profitably are, for now, unanswered questions, as AI model builders such as xAI, OpenAI and Anthropic are facing questions as to whether they can achieve any product differentiation or pricing power amid strong competition, especially with cheap, highly efficient models from China.
It is also unclear how much customers will be willing to pay. The increased use of tokens by business customers, for example, has been notable, but it is not yet clear whether that will translate into improved business performance rather than simply increased technical debt.
There is also a growing wave of anti-AI populism, driven by concerns that the technology is developing ‘too fast’, and the prospect of an ensuing political backlash. Other concerns include privacy violations, the potential for higher inequality and broader threats to humanity.
The challenge for AI proponents is that the economic pain will be front-loaded and felt before any gains in productivity and job creation begin. It takes time for industries to expand their use of technology to create new value and openings.
History also shows that governments have a poor record of managing economic reforms that appeal to the protectionist sentiments of many people. As AI advances faster than policymakers can respond, the politics surrounding the technology are starting to feel familiar.
With the stock market’s AI party in full swing, the big question remains “do investors really care?” At the moment, apparently not, but there are early signs of rising debt and lower revenue guidance that are starting to anger some investors, and some projects are meeting higher-than-usual demand premiums.
It’s not enough yet to rain on the AI parade, creating a very different semiconductor cycle and risk, especially if the hyperscaler CapEx is more concentrated, memory providers are increasing capacity, and the AI infrastructure is growing faster than making money for the business.
While the long-term revolution of AI may be a reality, widespread adoption is much slower than financial markets expect, causing periods of overbuilding, speculative infrastructure, financial ruin, and real estate resets before long-lasting economic structures emerge.
Technology can grow exponentially … real-world discovery cannot. The chip industry’s current growth numbers; the real world is not like that. Adding to the circle of this problem will one day cause a major correction in the chip market. We just don’t know when the house of cards will come crashing down.
