2025-12-26
In 2025, the global semiconductor market—driven by Artificial Intelligence (AI), High-Performance Computing (HPC), automotive electronics, and demand for high-speed communications—has fueled technology growth worldwide. A market once dominated by computing, memory, and communications is undergoing rapidly transformation due to Large Language Models (LLMs), the expansion of data centers, and the popularization of electric vehicles (EVs). This shift has fueled surging demand for high-end Graphics Processing Units (GPUs), AI accelerators, High Bandwidth Memory (HBM), and advanced packaging.
The World Semiconductor Trade Statistics (WSTS) predicts that the global semiconductor market will reach USD 760.7 billion in 2026, with an annual growth rate of 8.5%, hitting a record high. Meanwhile, Semiconductor Equipment and Materials International (SEMI) forecasts global semiconductor manufacturing equipment sales to reach USD 138.1 billion in 2026. This reflects a broad expansion across the entire value chain—from upstream equipment suppliers to downstream chip manufacturers—and underscores that the industry’s growth momentum is increasingly driven by AI computing and the rapidly rising demand for data centers.
The demand for training large-scale AI models has risen rapidly, making high-performance GPUs, AI server processors, and advanced packaging the focus of global technological development. US companies NVIDIA and AMD are launching new-generation AI accelerators and relying on global supply chains to expedite the buildout of High Bandwidth Memory (HBM) and advanced packaging capacity.
As data centers continue to scale, the need for high-speed data transmission has grown sharply. The adoption of Co-Packaged Optics (CPO) and silicon photonics accelerated in 2025, with US companies including Intel, Broadcom, Cisco, Marvell, and NVIDIA, viewing optoelectronic integration as a critical strategy to increase bandwidth and reduce power consumption. The memory market has also re-emerged as a key driver of growth, as HBM delivers significant improvements in capacity and bandwidth. Micron in the United States, along with Korea’s SK Hynix and Samsung, have all ramped up related investments.
In automotive electronics, demand for Microcontroller Units (MCUs), Insulated Gate Bipolar Transistors (IGBTs), silicon carbide MOSFETs (SiC MOSFETs), and in-vehicle sensors continues to climb, fueled by the growth of Advanced Driver Assistance Systems (ADAS) and electric vehicles. Power semiconductors and in-vehicle computing platforms are seeing expanding applications as vehicle electrification and intelligence advance. As a result, both the volume and complexity of automotive chips are rising year by year, forming a strong and sustained source of momentum for the sector.
Simultaneously, geopolitics continuously reshape the pattern of supply chain. The USA, EU, and Japan have extended subsidy policies aimed at promoting localization and diversifying risk, leading to a more geographically distributed global capacity layout. This trend has strengthened countries’ efforts to secure key manufacturing technologies and critical points within the semiconductor supply chain.
Driven by rising demand for AI and HPC, Taiwan’s semiconductor supply chain is poised for accelerated expansion and cross-domain integration in 2025. As the advanced manufacturing capability and advanced packaging demand grow at the same time, the leading foundry and Outsourced Semiconductor Assembly and Test (OSAT) companies in Taiwan – TSMC, ASE Technology Holding, and Powertech Technology Inc., maintain high capacity and also lead the high-end Printed Circuit Board (PCB), heat dissipation, and server Original Design Manufacturer (OEM).
The continued expansion of CoWoS (Chip on Wafer on Substrate), SoIC (System on Integrated Chips), and HBM production lines further strengthens Taiwan’s central role in the mass production of AI accelerators and data-center chips. In response to global trends in high-speed transmission and optoelectronic integration, Taiwan’s communications networking, photonics, and server supply chains are accelerating investment in CPO and silicon photonics. Taiwanese companies such as LandMark Optoelectronics and Luxnet Corporation are making significant progress in optical modules, optical engines, and high-speed transceivers, collaborating with server vendors to introduce next-generation designs. This allows Taiwan to expand beyond AI chip manufacturing to become a key supplier of high-speed transmission and optoelectronic systems.
Foreign companies are also deepening their presence in Taiwan. With expansions in advanced manufacturing and packaging, major international semiconductor equipment and materials suppliers—such as Applied Materials, Lam Research, KLA, DuPont, and NITTOBO (Japan)—continue to strengthen their local engineering support, technical services, and spare-parts capabilities.
According to SEMI, Taiwan is expected to remain one of the world’s largest semiconductor-equipment markets by 2026. The advancement of wafer fabrication, advanced packaging, and optoelectronic integration technologies encourages foreign firms to expand services and collaborative activities in Taiwan. Additionally, rising demand for CPO and silicon photonics has attracted foreign companies to partner with Taiwan’s supply chain in module validation, product development, as well as ramp-up mass production, which is accelerating the commercialization of next-generation optoelectronic technologies.
Overall, Taiwan’s semiconductor industry in 2025 is undergoing a clear shift toward higher-value activities. AI-driven innovations are accelerating manufacturing capabilities and packaging technology, enabling high-speed transmission and the integration of optoelectronics, and prompting foreign companies to collaborate with local companies on technology. Together, these developments further reinforce Taiwan’s strategic position at the center of the global semiconductor supply chain.
The global semiconductor industry is entering a new era centered on AI, HPC, and automotive electronics. Advanced manufacturing capabilities and packaging have already become the commanding heights of global technological competition. The localization of the supply chain and risk diversification fortified reliance on a reliable manufacturing base.
Taiwan continues to play an irreplaceable role in the global market with a complete supply chain, high-efficiency manufacturing, and a robust R&D foundation. Looking ahead, Taiwan retains a lead in AI chip manufacturing, advanced packaging, and specialized manufacturing capabilities, and continues to hold a key role in the global semiconductor ecosystem through cooperation with international enterprises to deepen supply chain connections.
Source： Industrial Technology Research Institute (ITRI) Industry Service Center Research Team
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