The semiconductor industry will hit $1 trillion in revenue by 2026, propelled by an artificial intelligence boom that has transformed chips from an invisible commodity into a strategic weapon.
A trillion semiconductor devices ship every year. That works out at roughly 100 for every person on the planet. They sit inside phones, robot vacuums, coffee makers and satellites. Finding a device that runs on a battery or plugs into a wall without one is now close to impossible.
AI has rewritten the demand curve
AI chips accounted for more than a quarter of all chips sold in 2025. By 2029, that share is expected to exceed half.
The shift matters because it changes who is buying and why. Growth is no longer tethered to iPhone launches or PC refresh cycles. It is driven by data centre construction, where spending is projected to cross $1 trillion.
The most advanced AI chips are designed to process vast data volumes in milliseconds. Some feature multiple layers of stacked memory to improve energy efficiency. They can sell for upwards of $30,000 each and travel between facilities in armoured vehicles.
One company holds the keys
TSMC manufactures more than 90% of the world's most advanced chips, mostly in gigafabs across Taiwan. Its business model is straightforward: other companies design chips, TSMC builds them.
That concentration is the industry's greatest vulnerability. Taiwan sits at the centre of a decades-long standoff with China, which claims the island as its territory. One estimate puts the cost of a conflict disrupting chip production at $10 trillion to the global economy.
Even without geopolitics, the supply chain is brittle. Taiwan's strongest earthquake in 25 years and the Covid pandemic both exposed how a single disruption can ripple worldwide.
Washington and Beijing are both spending billions
The US share of global chip manufacturing has fallen from nearly 40% in 1990 to about 10% in 2024. The Biden administration's $52 billion Chips Act is designed to reverse that slide. TSMC has committed $165 billion to build fabs in Arizona, collecting $6.6 billion in direct federal funding.
The Arizona site offers low humidity, minimal earthquake risk, cheap land and state tax incentives. Production there will be highly automated, turning out thousands of wafers once fully operational.
China is moving in the opposite direction, pursuing self-reliance after US sanctions cut Huawei off from critical components in 2019. Beijing has launched a $50 billion chip fund and is considering additional incentives worth up to $70 billion. China has already become the world's largest producer of analog chips, and a domestically made advanced chip debuted in 2023.
The machine no rival can replicate
Sitting upstream of all this is ASML, Europe's most valuable tech company. Its lithography machines transfer chip designs onto silicon wafers by directing light through mirrors, lenses and a blueprint, shrinking patterns to scales invisible to the human eye.
Every manufacturer of leading-edge chips uses ASML's tools. No competitor has managed to replicate them.
To push chip designs further, ASML developed a system that generates extreme ultraviolet light, a wavelength that does not naturally occur on Earth's surface. The machine is the size of a double-decker bus, weighs as much as a blue whale and costs $400 million.
The humble chips that keep everything running
Texas Instruments, the company that invented the integrated circuit, occupies the other end of the spectrum. It makes foundational chips that sense temperature, manage power and perform the unglamorous tasks that keep devices safe and operational. Some sell for a few cents.
TI is betting $60 billion on advanced manufacturing, moving to 300mm wafers that yield 2.3 times more chips than the 200mm standard used by most analogue rivals. Its new mega site in Sherman, Texas, covering more than 5.5 million square feet, will produce hundreds of millions of chips daily across fully automated lines.
TI does not make AI processors. But every AI system needs lower-end chips to handle the grunt work, and TI is positioning itself to supply them at scale.
Related reading
- Anthropic's Claude prompts claims of consciousness
- OpenAI's rush to match Anthropic's Mythos exposes a new front in the AI arms race, and a growing policy vacuum
- Prediction market bettors give Nvidia 69% chance of holding world's biggest company crown
The semiconductor industry has moved from servicing behind the scenes to defining infrastructure. The companies that control how chips are designed, built and delivered now sit at the centre of a global contest with no clear endpoint.