The global semiconductor industry is heading for a record-breaking milestone, with the market projected to surpass $1 trillion in value in 2026, according to KPMG's latest Global Semiconductor Industry Survey. Industry confidence has reached its third-highest level in the survey's 21-year history, driven by surging demand for artificial intelligence infrastructure — even as companies grapple with mounting pressures around energy supply, talent shortages, and supply chain resilience.
Cheng An-chih (鄭安志), a partner at KPMG Anjou (安侯建業) leading its technology, media and telecommunications practice, said the semiconductor sector has moved beyond cyclical demand-driven growth into a new phase of systemic competition centered on AI, computing power, energy, and organizational capability. He argued that long-term leadership will depend on a company's ability to integrate capital allocation, supply chain flexibility, and workforce transformation into a coherent governance framework.
Industry Confidence Hits Third-Highest Level in 21 Years
KPMG's survey placed the industry confidence index at 63, up from 59 last year, marking the third-highest reading since the survey began. Logic chips and memory are seeing the strongest growth momentum, fueled by continued expansion in AI and data center demand. More than half of respondents — 54% — expect their company's revenue to grow by more than 11%, with hiring, IT system upgrades, and mergers and acquisitions cited as primary strategies. Despite the optimism, 58% of respondents said they expect customer demand uncertainty to have a significant impact on operations.
Chen Chieh-hsi (陳傑曦), deputy chief operating officer of KPMG Anjou's advisory division, said AI-driven computing demand is prompting simultaneous investment in process upgrades and capital expenditure across the industry. He noted that M&A has become a critical tool for companies seeking to rapidly acquire technical talent, expand production capacity, and extend market reach — particularly as geopolitical pressures continue to reshape supply chains.
Supply Chain Resilience Becomes Top Priority
Supply chain agility ranked as the industry's most pressing operational concern, with 45% of respondents identifying it as their top priority. Energy availability is emerging as a significant constraint: 34% of manufacturing respondents expressed concern about whether their facilities will have adequate electricity supply over the next three years.
Rare earths, specialty chemicals, and energy supplies face compounding risks from geopolitical disruption and sudden global events. U.S. and Israeli strikes on Iran earlier this year extended Middle Eastern instability and triggered a helium supply crisis affecting the chip industry. Taiwan's major semiconductor manufacturers responded by diversifying procurement and installing on-site helium recovery systems, though long-term energy costs and operational pressures remain substantial.
The International Energy Agency has also warned that tight liquefied natural gas supplies are expected to persist through the end of next year, prompting countries worldwide to seek alternative sources.
Ding Chuan-lun (丁傳倫), deputy executive director of KPMG Anjou, said that semiconductor companies expanding into the United States face a complex web of cross-border tax and compliance issues beyond simply evaluating subsidies and production capacity. He said companies must carefully assess subsidy conditions alongside actual tax burdens, federal and state tax differences, transfer pricing arrangements, intangible asset attribution, and the impact of the global minimum tax on their overall tax base.
AI Becomes the Core Driver of Revenue Growth
Despite some investor concerns about whether AI growth is being inflated by speculative capital, survey data suggests that current momentum is grounded in real end-user demand. Seventy-three percent of respondents said AI has become a primary revenue driver for semiconductor companies, up from 67% the previous year. Global AI chip revenue is projected to reach $438.5 billion by 2029, with a compound annual growth rate of 25.9% over the next five years.
In Taiwan, AI-related capital investment has grown consistently year over year. GUC (創意電子) is investing more than NT$2 billion (approximately $62 million) in its "Turing Center" in Zhunan, Miaoli County, building out electrical and mechanical engineering infrastructure and uninterruptible power systems. MediaTek (聯發科) is committing roughly NT$10 billion (approximately $310 million) to build a data center at the Tongluo Science Park in Miaoli, staking an early position in the AI chip market.
Lee Wei-sheng (李威陞), head of KPMG Anjou's technology, media and telecommunications practice in Taiwan, said that for Taiwan's semiconductor industry, supply chain competition has shifted from a cost-driven model to one centered on speed and resilience. He said Taiwanese companies have demonstrated strong adaptive capacity — diversifying procurement, building local backup systems, and upgrading technology — to maintain their critical role in the global supply chain.
AI Collaboration Emerges as a Key Priority for the Next Three Years
Talent ranked as the second-biggest challenge facing the semiconductor industry, cited by 41% of respondents — behind only trade protection and tariff restrictions on semiconductor technology and intellectual property, which 50% flagged as their primary concern. Worsening talent shortages are pushing industry leaders to both accelerate hiring and rely more heavily on AI tools to sustain productivity.
Current internal AI deployment is concentrated in IT and R&D functions, where it is used to accelerate decision-making and streamline operations. Procurement and supply chain teams represent the second-largest area of adoption, valued for their potential in forecasting, process simplification, and operational risk reduction. Sales and marketing teams are also incorporating AI to personalize customer engagement and sharpen demand forecasting. According to the survey, generative AI adoption stands at 44% in IT and R&D, and 36% in procurement and supply chain management.
Companies are using varied approaches to help employees navigate the transition. Taiwan-based telecom operator Far EasTone (遠傳電信) launched an AI enablement program that began with senior executives before training departmental "seed teams," which then extended AI capabilities to frontline staff through cross-functional collaboration. Tech startup Appier offers internal courses for employees and encourages departments to use AI tools to design workflow applications, treating human-AI collaboration as a new dimension of leadership — one in which managers oversee both human staff and digital agents.
KPMG said the simultaneous acceleration of AI adoption and geopolitical realignment is reshaping the competitive logic of the semiconductor industry. Companies now face not isolated market or technology disruptions, but systemic challenges spanning investment strategy, supply chains, energy, and talent allocation. According to the firm, only companies that embed resilience into their operations and decision-making — and take a long-term view of their growth trajectory — will be positioned to sustain competitive advantage and secure a leading role in the industry's future.
Original Article in Chinese
