The AI revolution has shattered the global chip market, halting the usual demand decline in the first quarter

Updated semiconductor market outlook for Q1 2026

According to Central News Agency data, the typical sales decline after a “harvest” period in the second half would be normal for most chip makers. However, active growth of artificial‑intelligence (AI) infrastructure has altered this dynamic: demand for chips rose in Q1 and is expected to continue rising even among smaller players.

1. Vanguard International Semiconductor (VIS)
Metric Forecast Supply volume +1 – 3 % versus the previous quarter Average selling price –3 – 5 % due to product mix changes Revenue Remains at last quarter level or falls by up to 4 %
Key factors:
- Increased orders for chips for TVs and e‑readers.
- Rising AI demand, especially in the power electronics segment.

VIS is already running its lines at full capacity. The company warns of a price increase (10 – 15 %) starting in April, which should improve its profit margin.

2. TSMC
TSMC, owning part of VIS’s shares, forecasts record revenue this quarter thanks to strong demand for AI infrastructure components. Expected revenue growth is about 4 %, leading to a range of $34.6 – $35.8 billion.

3. PSMC
Taiwanese company PSMC also plans price hikes:
- Prices for display drivers and camera sensors have risen since January.
- From March, power‑electronics costs (200 mm silicon wafer components) are expected to rise.

These changes have not yet noticeably impacted PSMC’s revenue or sales volumes in Q1.

4. UMC
UMC intends to keep prices and supply volumes at last quarter levels, which will be seen as progress compared with the seasonal drop (‑8 – 9 %) in the previous first quarter. The main growth driver is demand for signal processors for smartphones and AMOLED panel drivers made on 22‑nm technology.

Conclusion:

Despite the usual seasonal dip, AI market activity drives production growth and changes price dynamics. VIS, TSMC, PSMC, and UMC show different response strategies—from raising prices to stabilizing volumes—to take advantage of increased demand in Q1 2026.