Taiwan Chip Output Forecast Nears NT$10 Trillion as Memory Prices and AI Demand Surge

AI demand lifts Taiwan's chip forecast to a record

Taiwan's semiconductor industry is forecast to produce NT$9.7615 trillion in output in 2026, up 49.7% from a year earlier, as demand for artificial intelligence computing drives growth across chip manufacturing, design, packaging and testing. Memory and other manufacturing is expected to grow fastest, rising 265.8% to NT$795.9 billion as supply shortages push prices higher.

The Taiwan Semiconductor Industry Association (TSIA) released the figures on November 13, drawing on estimates from the Industrial Technology Research Institute's Industrial Economics and Knowledge Center. The annual forecast, equivalent to approximately US$296.8 billion, would bring Taiwan's IC industry close to NT$10 trillion for the first time. IC stands for integrated circuit, the electronic circuits commonly called chips.

Wafer foundry production remains the industry's largest business. Its output is projected to reach NT$6.0249 trillion, up 44.5%, with Taiwan Semiconductor Manufacturing Co. (TSMC) providing the main growth momentum. Foundries manufacture chips designed by their customers, turning circuit designs into physical products on thin discs of semiconductor material called wafers.

The new estimate is far above ITRI's earlier forecast of about NT$7.1 trillion for 2026. Taiwan's estimated output in 2025 was NT$6.5225 trillion, itself an increase of 22.7%. The latest projection therefore points to faster growth on top of an already expanding industry.

A forecast raised by about NT$2.66 trillion

ITRI's revision adds approximately NT$2.6615 trillion to its earlier annual estimate, an increase of about 37.5%. The scale of that adjustment reflects stronger demand than previously expected, particularly from AI infrastructure and computing systems that need advanced processors, large amounts of memory and increasingly complex packaging.

The projected increase from 2025 is NT$3.239 trillion. In practical terms, Taiwan's chip businesses would generate almost half as much additional output value in one year as they generated during all of 2025.

Output value is measured in money, so both the amount produced and the price of products affect the total. This matters especially for memory, where shortages and rising prices are helping drive the sharp increase. The expansion combines stronger production demand with more valuable products.

Memory grows fastest, while foundries remain largest

Memory and other manufacturing is projected to reach NT$795.9 billion in 2026, or about US$24.2 billion. Growth of 265.8% means the segment would be roughly 3.66 times its size a year earlier. Its rapid rise reflects a recovery from a low base, stronger demand and a shortage of supply that has pushed product prices sharply higher. ITRI attributes the projected growth in memory output mainly to severe undersupply and soaring product prices.

AI servers require large amounts of memory to keep their processors supplied with data. High bandwidth memory, often shortened to HBM, places memory chips close together in stacks so they can move more data quickly. Demand for this type of memory is one of the forces supporting the industry's expansion.

Wafer foundries, however, are expected to account for about 61.7% of Taiwan's total semiconductor output, compared with about 8.2% for memory and other manufacturing. The foundry forecast of NT$6.0249 trillion is approximately 7.6 times the memory category's NT$795.9 billion.

Those figures explain the two different forces behind the headline: memory has the fastest percentage growth, while foundries supply most of the industry's value. TSMC's role in advanced manufacturing makes its production a central driver of the larger segment.

Third quarter growth reaches every major segment

Taiwan's IC industry recorded output of NT$2.662 trillion in the third quarter of 2026, up 19.3% from the second quarter and 59.4% from a year earlier. Every major segment grew by more than 30% compared with the same period in 2025, showing that the expansion extended across the production chain.

IC manufacturing contributed NT$1.8656 trillion, approximately 70% of the quarterly total. It grew 20.3% from the previous quarter and 64.1% from a year earlier. Within manufacturing, foundry output reached NT$1.6165 trillion, up 17.1% from the second quarter and 49.6% annually.

Memory and other manufacturing produced NT$249.1 billion during the quarter, increasing 46.3% from the previous three months and 340.1% from a year earlier. That annual increase means its value was about 4.4 times the level recorded in the third quarter of 2025.

Chip design also expanded strongly, reaching NT$536.8 billion, up 17.6% from the second quarter and 53.8% annually. Packaging output reached NT$178.5 billion, rising 17% quarterly and 42.6% annually. Testing contributed NT$81.1 billion, an increase of 14.1% quarterly and 39.1% annually.

More value flows through design, packaging and testing

ITRI forecasts full year IC design output of NT$1.9479 trillion, up 36.7%. Design businesses develop the circuits and layouts that determine what a chip does, while manufacturers turn those plans into working silicon. The projected expansion shows that demand is benefiting the work before fabrication as well as factory production.

Packaging output is expected to reach NT$681.1 billion, up 41.2%, while testing is forecast at NT$311.7 billion, up 36.4%. Together, those two segments would account for NT$992.8 billion, just over one tenth of Taiwan's projected industry total.

Packaging connects and protects chips so they can operate inside a device. For advanced AI systems, it also brings processors and memory close together, helping them exchange information quickly. Testing checks whether the chips and assembled packages work as intended.

Manufacturing, including foundries and memory and other manufacturing, is projected to reach NT$6.8208 trillion for the year, up 55.5%. The figures show a production chain expanding at several stages, with manufacturing retaining the largest share and packaging taking on a more demanding technical role.

Why AI needs more than a powerful processor

ITRI identifies computing performance, memory bandwidth and fast connections as linked requirements behind the industry's growth. A powerful processor needs data to arrive quickly enough to keep it working. Memory bandwidth describes how much data can move between memory and a processor in a given amount of time.

Strong demand for 3nm manufacturing and the expansion of 2nm production are supporting Taiwan's advanced chip business. These process names identify generations of manufacturing technology used to build increasingly complex circuits. Demand for AI data centers and high performance computing is helping support their use.

Advanced packaging connects those processors with other components. CoWoS, short for Chip on Wafer on Substrate, is one technology used to bring computing chips and high bandwidth memory together. Heterogeneous integration means combining different kinds of chips in one closely connected system, allowing each component to perform its particular task.

ITRI also points to silicon photonics and co-packaged optics as possible supports for faster data transmission with lower energy use. These approaches use light to carry data and bring optical connections closer to electronic components. Their importance grows as computing systems need to move more information between chips and equipment.

Mature and specialty manufacturing processes also support applications related to this expansion. Taiwan's opportunity therefore extends beyond the most advanced processors to the other chips and connections needed to build a working computing system.

A stronger fourth quarter and further growth in 2027

ITRI expects fourth quarter output to reach NT$2.9421 trillion, up 10.5% from the third quarter and 66.7% from a year earlier. Manufacturing, design, packaging and testing are all forecast to rise from the preceding quarter.

The third and fourth quarters together would contribute NT$5.6041 trillion, or about 57.4% of the projected annual total. That concentration shows how much the 2026 forecast depends on the stronger pace of activity during the second half of the year.

The figures trace an accelerating expansion followed by a forecast of further growth:

• 2025: Estimated annual IC output reached NT$6.5225 trillion, up 22.7%.
• Third quarter of 2026: Output reached NT$2.662 trillion, up 59.4% from a year earlier.
• November 13: TSIA released the latest quarterly statistics and annual projections.
• Fourth quarter of 2026: ITRI forecasts output of NT$2.9421 trillion, up 66.7% annually.
• 2027: ITRI projects output of about NT$11.8 trillion, with growth of 21.5%.

The fourth quarter, full year 2026 and 2027 figures remain forecasts. ITRI's outlook puts 2027 growth below the projected 49.7% rate for 2026, while still anticipating a substantial expansion from a much larger base.

Prices and investment costs will shape the gains

Memory prices will help determine how much of the current surge carries into later periods. Higher prices raise output value, while continued demand from AI servers supports purchases. A change in either pricing or customer demand would affect the pace of growth.

Advanced packaging capacity is another factor. Manufacturers investing in new equipment must spread its cost across the years they expect to use it, an accounting expense called depreciation. Those costs can affect profit margins even when production and sales are rising.

Taiwan's forecast therefore describes a large increase in industry activity, with the financial results for individual businesses depending on their products, prices, investment costs and customer orders. Memory producers, foundries and packaging businesses face different balances between those factors.

The clearest change is the breadth of demand. Taiwan's projected expansion runs from circuit design through wafer production to the packaging and testing needed for finished chips. AI infrastructure is increasing the value of that connected production chain, while foundries remain its largest component.

Key Points

• Taiwan's IC industry output is forecast to reach a record NT$9.7615 trillion in 2026, up 49.7%.
• The estimate is about NT$2.66 trillion above ITRI's earlier forecast of roughly NT$7.1 trillion.
• Memory and other manufacturing is projected to grow 265.8% to NT$795.9 billion, supported by demand, shortages and higher prices.
• Foundry output is expected to reach NT$6.0249 trillion, about 61.7% of the industry total.
• Third quarter output reached NT$2.662 trillion, with all major segments growing more than 30% annually.
• ITRI forecasts NT$2.9421 trillion for the fourth quarter and about NT$11.8 trillion for 2027.
• Memory prices, customer demand and the cost of new packaging capacity will help shape subsequent growth and profits.