Global Foundry Revenue Surges 23% as AI Reshapes Industry Structure

The global foundry 2.0 market revenue climbed 23% year-on-year in Q1 2026 to reach $86 billion, driven by strong demand for AI GPUs and AI ASICs, with Taiwan Semiconductor Manufacturing Company (TSMC) remaining the primary beneficiary of the AI-driven semiconductor upcycle .

TSMC Leads AI-Driven Growth

TSMC delivered 41% year-on-year revenue growth in Q1 2026, with strong demand for AI GPUs, AI ASICs, and advanced packaging continuing to support utilization across its leading-edge process nodes. Counterpoint Research expects AI-driven demand momentum to remain strong, supporting 36% YoY revenue growth for the full year 2026 .

“AI is not just a cyclical upturn, but points to a broader structural transformation across the semiconductor industry,” said Senior Analyst William Li. “We are seeing unprecedented capacity reallocations across multiple fabs, with mature-node capacity increasingly converted to support advanced technologies” .

Chinese Foundries Outperform on Localization Demand

Chinese foundries continued to outperform, driven by domestic semiconductor localization demand and structural wafer price increases across both 8-inch and 12-inch nodes. SMIC reported 12% YoY revenue growth, while Nexchip achieved 19% YoY growth .

SMIC reported record revenue of $3.006 billion in Q2 2026, up 36.1% YoY, with capacity utilization at 93.7%. Hua Hong reported Q2 revenue of $717.5 million, up 26.8% YoY, with utilization reaching 102.8% .

Demand Extends Beyond AI Chips

The AI investment cycle is increasingly expanding beyond foundry capacity into packaging and testing. ASE and Amkor reported 18% YoY and 25% YoY revenue growth, respectively .

According to industry reports, both SMIC and Hua Hong are considering additional capacity expansions. SMIC is exploring equipment investments at existing fabs, while Hua Hong is pursuing multiple projects including the RMB 3.8 billion Fab 9B project in Wuxi and the acquisition of HLMC’s Fab 5 .

Deloitte’s 2026 Global Semiconductor Industry Outlook projects semiconductor sales will accelerate to 26% growth in 2026, reaching $975 billion. Even with a subsequent slowdown, annual sales are expected to exceed $2 trillion by 2036 .