Unit demand – one of Malcolm Penn’s (CEO of Future Horizons and a veteran industry analyst) four horsemen of the semiconductor apocalypse – could be on the cusp of a recovery.
In 2025, semiconductor market growth was driven by a rise in average selling prices (ASPs).
Says Penn: “You can’t claim a real market recovery until unit growth resumes.”
He said November 2025 saw a weekly unit run rate of 7.8 billion, still 5% below the 8.2 billion a week maxed out peak.
“Unit demand might just be creeping back,” says Penn. The rebound in the second half of 2025 was influenced by tariffs, memory shortages, and inventory build, though as Penn observes: “It’s still unclear if the post-COVID boom excess inventory has been fully depleted.”
Capital expenditure is remaining “stubbornly high,” says Penn.
While what he describes as bleeding edge investment in logic and memory capacity is justifiable, he sees the AI bubble as “dangerous.”
He fingers China as the main capital expenditure culprit. “In 2025, China capital expenditure made up 37% of the worldwide total. That is one and a half times as much as Taiwan, twice as much as Korea, 4.7 times as much as the USA, and 17 times as much as Europe.”
Average selling prices have enjoyed a strong recovery. From a low point of $1.11 in June 2022, a recovery that began in May 2023 has seen prices rise to $2.19 in November 2025.
Penn picks logic as the original price driver, adding it has now been joined by memory and micro price increases. The real driving force is the strong AI demand plus TSMC’s logic system on chip price increases.
Penn is forecasting a 12% semiconductor market growth, $813 billion in 2026. That is down from 22% in 2025. “If the US economy stays strong the market could grow 18% to $863 billion,” says Penn.
Rocks on which the market could sink include unstable global geopolitics, tariffs, and trade restrictions. AI data centre growth must be sustained, and IC unit growth will have to return in the first half of 2026.
Penn throws cold water over excitable market forecasts of a $1 trillion dollar market by 2030 and $2 trillion by 2035.
“These are eye-watering numbers and, with all due respects to my esteemed industry cohorts, this is not going to happen,” says Penn. “There isn’t enough capacity.”
