What’s ahead in 2026 for the semiconductor industry

Entering 2026, the semiconductor supply chain is caught in a moment of contradiction. While global inventory levels are largely back to normal and the excesses of prior years have been resolved, this sense of stability is misleading. Beneath the surface, the industry faces a new wave of volatility driven by AI’s relentless expansion.  

Memory shortages, pricing pressure from foundries, and unpredictable geopolitical disruptions pose fresh challenges for procurement teams. With DDR4 exiting the market, DDR5 suffering constrained allocation, and foundational players like Nexperia undergoing geopolitical fractures, the market is once again tilting toward risk. Meanwhile, the AI boom continues to strain capacity across nodes and memory formats, even as generalized market indicators point toward normalization.

Ahead of the new year, the industry isn’t staring down a full-blown crisis as it did in 2021. Yet, there is a degree of risk recalibration needed. Strategically navigating this shift will be key to success in 2026.  

1. The Nexperia situation and its impact on 2026

Among the most disruptive stories entering the new year is the ongoing tension within Nexperia. In late 2025, the Dutch government seized control of the company, splitting it into two distinct entities, Dutch Nexperia and China Nexperia, citing concerns over Chinese ownership and control of sensitive technologies.  

China responded by imposing export controls on Nexperia-originated components, a move that sent ripples through the global supply chain. The automotive sector, which is dependent on Nexperia’s discrete semiconductors, experienced the most volatility.  

Although China walked back its export controls, the situation remains unstable. Dutch Nexperia has halted wafer shipments to China, and reports indicate that China Nexperia has significantly scaled back production. In some cases, lines have reportedly been halted entirely. This disruption has already led to noticeable increases in pricing for discrete components and has pushed lead times out by six to eight weeks beyond their prior baselines.

Many automakers have responded by returning to COVID-era planning. Manufacturers are stretching component inventories and slowing production schedules to avoid line stoppages. But even industries outside automotive are bracing for potential shortages in Q1 2026. Even if a resolution emerges before year’s end, the lag in ramping production back up means constrained availability will persist. Buyers would be wise to qualify alternative lines and prepare for sustained allocation risk.

2. Memory constraints amid AI boom

AI has been the dominant force influencing the chip supply chain throughout 2025, and that trend is expected to persist in the new year. The memory segment is feeling the most pressure as DRAM, high-bandwidth memory (HBM), and even legacy modules like DDR4 are facing a perfect storm of supply-side constraints and demand-side acceleration.

The phase-out of DDR4 is occurring even as pockets of demand remain, particularly in embedded systems and industrial equipment. Meanwhile, supply of DDR5 intended to ease this transition is tightening across sectors thanks to booming demand for new AI data centers. As these server buildouts continue to consume massive volumes of memory capacity, available supply will be stretched thin well into 2026. Indeed, SK Hynix, a key manufacturer, has already booked its entire memory chip capacity for 2026.  

Analyst data reinforces these concerns. A Gartner report recently stated that, “DRAM will remain in undersupply until 1Q26, driven by continued strong demand from AI severs, smartphone DRAM content increase, and inventory build-up for legacy DRAM.”  

Server DRAM pricing climbed 4.3% in Q4 2025, reflective of strong demand. However, experts believe that prices will pull back by 14.3% by Q3 2026 as supply improves. The Gartner report also claims, “HBM prices are expected to increase through 2Q26 as the HBM4 shipment scales, followed by a slight reduction in 2H26 from incremental supply additions from Samsung and Micron.”

Low-power DRAM, already experiencing pricing pressure, is expected to see some relief by midyear 2026. Gartner projects costs will drop some 13% by Q3 due to reductions in LP4X prices. However, long-term trend points to increasing adoption in servers, particularly with LP modules expected to account for over 10% of server memory by 2029.

Additional concern comes from Tom’s Hardware, which indicates that Samsung, SK Hynix, and Micron could leave DDR5 buyers in a tough spot, with prices surging 30% to 50% every quarter through the end of the first half of 2026. This sentiment is echoed by TrendForce, which highlights concern over the availability of general memory products in the early months of the new year.  

With Nvidia’s valuation now surpassing $5 trillion and demand showing no signs of slowing, many expect AI to continue drawing down available supply faster than manufacturers can replenish it. If the current trajectory holds, the memory segment could become the single largest point of friction in the semiconductor supply chain during early 2026.

3. Pricing pressure and inventory trends

Compounding the supply risks of memory and discrete components is a new wave of foundry price increases, particularly at advanced nodes. TSMC, the dominant player in cutting-edge semiconductor manufacturing, is reportedly preparing to raise prices by as much as 3% to 10% for its sub-5nm offerings. These hikes are expected to ripple across the market, especially in AI-heavy applications, where leading-edge processes are essential.

OEMs and other buyers reliant on these nodes will face tough decisions. Either absorb the additional costs or pass them down the chain. Meanwhile, as more customers commit to long-term capacity agreements with TSMC, allocation available to second-tier clients will narrow. Given that Nvidia and Apple have already secured large blocks of production capacity through the end of 2026, many will be left fighting for leftovers that may not even exist in the latter half of the year.  

Fortunately, general inventory levels outside of AI -focused products appear to be normalizing. Gartner reports that “in 3Q25, the GIISST remained in the moderate shortage zone, driven by robust demand for AI-related advanced nodes,” which led to a “marginal 1.4% quarter-on-quarter decline in inventory levels across the semiconductor supply chain.”  

The report also claims that, “The foundry inventory index registered growth and achieved normal status in 3Q25.”  

Still, Gartner notes that “legacy node semiconductors—particularly analog, discrete, and MCU components—continued to exhibit elevated supplier-held inventories and will continue through 2025 amid weak demand and prolonged recovery.”

4. Export control walk back after U.S.-China talks

One rare moment of clarity for the industry came in November, when the U.S. and China agreed to a one-year pause on the ongoing escalation of export controls. As part of the truce, both nations through 2026, including the U.S. withholding implementation of its proposed 50% Affiliates Rule. China, in turn, agreed to suspend rare-earth mineral export limits, easing pressure on materials critical to component production.

This is good news for the industry, as the crunch on rare earths has been a challenge for many supply chains. However, the agreement is temporary and is unlikely to ease supply challenges overnight. Material availability isn’t expected to rebound immediately, and the specter of renewed restrictions or negotiations breaking down remains a distinct threat. If relations sour again, companies that treat this pause as a permanent resolution may find themselves unprepared.  

Strategic recommendations for 2026

In 2026, navigating ongoing uncertainty in the semiconductor supply chain will require a pivot from reactive sourcing to more proactive strategies. Here are four key recommendations for 2026.  ‍

Early visibility: With lead times lengthening across high-demand components, procurement teams should leverage market monitoring tools, like Datalynq, to observe what parts on their BOMs show an increased risk of disruption. ‍

Supplier diversification: Given geopolitical risk (like the Nexperia situation) and export-control uncertainty, buyers should maintain multiple qualified sources for critical SKUs. ‍

Materials and minerals awareness: Focus on improving visibility upstream, as numerous critical minerals are used in the semiconductor manufacturing process. If trouble exists there, it will be reflected in both end products and the components themselves. ‍

Supply availability security: Rather than relying on just-in-time manufacturing, consider maintaining strategic safety stock for mission-critical components, especially in industries where redesign costs are high. If you can’t afford the warehouse costs, consider partnering with a distributor, such as Sourceability, that can help you secure needed stock when it’s in short supply and offset excess stock to regain capital if there is too much.

The situation is fluid, but proactivity will always be necessary.

Although there are many unknowns as we head into 2026, the situation is less chaotic than it has been in previous years. With broad shortages (outside of memory) and pandemic-era volatility fading, we are closer to normalcy than we have been in a long time. However, pressure points still exist. Segments tied to AI or geopolitical focus will continue to face acute pressure and the pricing challenges that come with.  

Ultimately, the disruptions of 2025 have laid bare the importance of visibility, diversification, and resilience as core procurement pillars for the electronics industry going into the new year.