Semiconductor industry outlook for 2026 shows rebound amid mergers

AI acceleration and strategic acquisitions are reshaping the semiconductor landscape.

The semiconductor industry is entering 2026 with renewed momentum after a volatile post-pandemic cycle marked by severe inventory corrections and uneven demand. Artificial intelligence continues to act as a primary growth catalyst, fueling investments across advanced logic, memory, and data center infrastructure.  

Meanwhile, competitive pressures are driving strategic acquisitions among major players. Texas Instruments' announcement is just the latest in a growing string of acquisitions and mergers across the semiconductor industry over the past few years. While a benefit to TI customers, the new and expanded portfolio comes with growing concerns about the shrinking number of suppliers in the chip industry.  

Semiconductor industry outlook signals AI-led recovery

In the early days of 2026, projections look good for the semiconductor industry. Headlined by record revenue and skyrocketing AI demand, Deloitte projects global chip sales will reach $975 billion in 2026, with growth accelerating from 22% to 26% year-over-year.  

While the growth is significant, it is unusually concentrated. Semiconductors to support generative AI are expected to account for roughly $500 billion—over half of the industry’s total revenue. Yet, those same chips represent under 0.2% of total unit volume. Of the 1.05 trillion chips sold in 2025, Deloitte estimates just 20 million were destined for generative AI use cases.  

This high-margin, low-volume approach has sent shockwaves through the industry in recent months as major chipmakers pivot to chase higher profits from AI chips. From memory to power ICs, this has left non-AI semiconductor buyers in a tough position as inventory levels drop and prices rise.  

AI’s dominant share of chip revenues also raises concerns about the industry’s performance being dictated by a narrow set of AI roadmaps. Deloitte flagged this “all-in on AI” stance, noting that if monetization timelines slip or constraints in data center buildouts hamper growth, the entire industry could suffer. Even apart from these setbacks, many non-AI segments may experience slower growth or even a slight decline in 2026 despite the big picture looking historic.

Memory is the clearest stress point. Deloitte projects memory revenue of $200 billion in 2026, with suppliers cautious on capacity expansion for lower-margin products. It’s worth noting that figure skews heavily toward high-priced memory products for AI hyperscalers. As AI’s hunger for HBM pushes demand higher, further price hikes for DDR4 and DDR5 are expected.  

The influence of AI is also being felt outside order ledgers as demand is tied to data center buildouts and the specialized networking and power ecosystems to support them. This translates to sustained capex increases both at the leading edge of memory as well as areas like advanced packaging and power/thermal management. These less glamorous bottlenecks will have a major say in how quickly new AI facilities can be deployed and ramped, making them important to watch in the months ahead.  

At the same time, the industry’s consumer electronics hangover is finally normalizing, helping to stabilize the baseline supply-demand balance. Although Deloitte notes that inventory digestion by consumer electronics buyers has improved, AI is still the primary growth driver for the market. Elsewhere, automotive electrification and advanced connectivity continue to be bright spots for long-term growth.  

For supply chain leaders, the implication here is that “normalization” in the chip industry doesn’t equate to a return to the same old cycle. Rather, with AI leading the way across the board, allocation risk and pricing volatility will closely follow its path for better or worse.  

With more than a decade of expertise, Sourceability helps customers safeguard their procurement strategies by securing early allocations in high-growth categories and diversifying sourcing to reduce exposure to components more prone to price fluctuations or demand disruptions.

Texas Instruments acquisition reflects strategic consolidation

Earlier this month, Texas Instruments announced its plan to acquire Silicon Labs in a move that will bolster its embedded wireless connectivity offerings. Under the proposed agreement, TI will acquire Silicon Labs for $231 per share in cash and roughly $7 billion of incremental debt. Pending regulatory approval, the deal is expected to close in early 2027.  

With the move, TI will add “1,200 additional products” to support various wireless standards. Perhaps more importantly, it gains a full stack of software, firmware, and applications that is hard to recreate quickly, especially when the industry’s best engineering talent is already absorbed by AI datacenter roadmaps.

TI plans to leverage its existing manufacturing advantages to capitalize on the acquisition of Silicon Labs’ IP. Notably, TI Chairman, President, and CEO Haviv Ilan has said that his firm plans to bring assembly and testing into its own facilities rather than following Silicon Lab’s approach of outsourcing to external foundries.  

Within three years of closing the deal, Ilan expects to capture more than $450 million in annual manufacturing and operational synergies—notably distinct from revenue synergies. Among those gains are improvements in cost of goods sold and lower operational expenses.  

Zooming out, this move is representative of what semiconductor consolidation looks like in a market dominated by AI. Leading players like TI aren’t just making acquisitions to “buy” revenue but are working to vertically integrate and streamline product offerings. While such moves can make procurement simpler, they also reduce supplier diversity in certain categories, opening the door for potential vulnerability in the face of disruption.  

As the chip industry pursues a new type of consolidation, disciplined sourcing strategy matters more than ever. Early qualification of alternates, tracking lifecycle transitions, maintaining flexibility across geographies and channels are essential. Sourceability helps customers leverage best-in-class market data and sourcing expertise to address these concerns and mitigate single-source risk.