On July 30, 2026, SEMI released its mid-year report, raising its global semiconductor market size forecast to $621 billion, up 12.7% from 2025. This news immediately ignited enthusiasm in the investment community—chips, once regarded as a cyclical industry, are becoming long-term core assets with unprecedented certainty. Why invest in chips? After years of volatility and adjustment, the semiconductor industry in 2026 is showing three profound logic points, each pointing to a common conclusion: the value of chip investment has shifted from "optional" to "necessary."
Logic 1: AI Computing Demand Explodes, Chips Become the "New Oil" of the Digital Economy
If the past decade was the golden age of mobile internet, the next decade will surely be the intelligent era driven by AI. From large model training to edge inference, from autonomous driving to robots, every AI application relies on underlying chip support. In the first half of 2026, the global AI chip market exceeded $80 billion, up 45% year-on-year, making it the fastest-growing segment across semiconductor sectors.
NVIDIA's latest Q2 earnings report shows data center revenue grew over 100% year-on-year, with its H200 and next-generation Blackwell architecture chips in short supply, and orders scheduled into Q1 2027. Meanwhile, AMD, Intel, and Google's self-developed TPUs have all increased investment, intensifying the AI chip "arms race." And this is just the beginning. According to McKinsey, global AI computing demand will grow another 10 times by 2030, meaning demand for high-performance GPUs, accelerator chips, and supporting memory and network chips will remain robust for a long time.
Beyond AI, Automotive Chips Also Deserve Attention
New energy vehicles are moving from "electrification" to "intelligence." The chip value per vehicle has jumped from about $300 for traditional fuel vehicles to over $1,000, and high-end smart models can exceed $2,000. In the first half of 2026, the global automotive semiconductor market exceeded $30 billion, with power semiconductors (IGBT, SiC) and SoC chips as major growth engines. Automotive chips have long certification cycles and are hard to replace; once integrated into the supply chain, they form stable long-term partnerships, providing a safety margin for investment.
Logic 2: Global Supply Chain Restructuring, Domestic Substitution Enters an Accelerated Phase
Over the past three years, the global semiconductor industry has gone through a cycle from "shortage" to "glut," but one irreversible trend is that supply chains are becoming regionalized and diversified. The United States, the European Union, Japan, South Korea, and Southeast Asian countries have all introduced chip subsidy bills aimed at building local or regional chip manufacturing capabilities. This process is not only reshaping the industry's geographic landscape but also creating abundant investment opportunities.
Taking China as an example, domestic semiconductor equipment procurement grew 32% year-on-year in the first half of 2026, and the penetration rate of domestic equipment in mature process nodes rose from less than 10% in 2020 to over 25% now. With policy support, foundry leaders such as SMIC and Hua Hong Semiconductor are accelerating capacity expansion, and various design companies are breaking through in niche segments. China is not alone—India, Vietnam, Thailand, and other emerging markets are actively undertaking chip packaging, testing, and some manufacturing segments, forming a "multi-center" pattern in the global semiconductor supply chain.
The "Triple Opportunity" Brought by Supply Chain Restructuring
- Domestication of Equipment and Materials: With advanced process nodes restricted, mature process expansion benefits domestic equipment and material makers, and the domestic substitution rate for semiconductor equipment still has severalfold room to grow.
- Revaluation of Packaging and Testing: Advanced packaging (Chiplet, 2.5D/3D) has become a key path to improving chip performance, and packaging and testing companies continue to gain influence in the industry chain.
- Rise of Southeast Asian Supporting Chains: Countries like Thailand and Malaysia, leveraging cost and geographic advantages, have become important destinations for global semiconductor capacity transfer, offering development opportunities for related listed companies.
Logic 3: Policy Dividends and Industry Cycle Resonate, Semiconductor Prosperity Keeps Rising
Semiconductors are a typical capital-intensive industry, and every leap has relied on the dual drive of policy and market. Since 2026, policy support for the semiconductor industry from major global economies has only increased. The second phase of funding under the U.S. CHIPS Act has begun disbursement, while the European Chips Act announced an additional €20 billion for advanced process R&D. In China, the 15th Five-Year Plan lists integrated circuits as the top priority in tackling "bottleneck" technologies, with tax incentives and the third phase of the Big Fund continuing to provide support.
In terms of the industry cycle, global semiconductor sales growth returned to double digits in Q1 2026 after hitting a trough in 2025. The SEMI report noted that industry prosperity in the first half of 2026 exceeded expectations, mainly due to memory chip price recovery, the AI data center construction boom, and the recovery of industrial and automotive demand. The inventory cycle has shifted from destocking to restocking, and the industry is entering a new upward cycle.
The Resonance of Cycle and Growth Creates a "Davis Double Play" Effect
When industry profits rise due to demand recovery and market valuations increase due to growth certainty, stock prices often move far beyond earnings growth. This effect has been common in historical semiconductor bull markets. In the first half of 2026, major global semiconductor indices rose an average of about 27%, with China's A-share semiconductor index, the Philadelphia Semiconductor Index, and Thailand's SET semiconductor-related stocks all performing strongly. For investors who have not yet entered, the current stage is still early in this cycle.
Investing in Chips: The Victory of Long-Termism
The high volatility of the semiconductor industry once discouraged many investors, but looking ahead to the next decade, chips, as the cornerstone of digitalization, intelligence, and green development, have a demand ceiling that has not yet been touched. Whether AI, new energy vehicles, IoT, or quantum computing, chips are the most fundamental support. Investing in chips is essentially investing in the "infrastructure" of the digital economy era and positioning along the inevitable path of human civilization advancing to a higher dimension.
Of course, any investment carries risks. Global macroeconomic fluctuations, geopolitical conflicts, and technology iteration falling short of expectations may cause periodic shocks. But as Buffett said: "Investment is betting on the country's destiny." The chip industry is in a super cycle driven by both technological revolution and global competition. For long-term investors who can withstand volatility, every pullback may be an opportunity to position.
Returning to our original question: Why invest in chips? The answer is self-evident—because it is the core engine of the future world, the high ground of technological competition, and a golden window endowed by the times. Seizing semiconductors means seizing the future.
