In July 2026, the global semiconductor market exhibited a significant divergent growth trend. In the domestic market, IC (Integrated Circuit) production and export volumes continued to maintain an upward trajectory. At the component market level, driven by the large-scale construction of AI (Artificial Intelligence) infrastructure, demand from data centers and HPC (High-Performance Computing) remained at high levels, causing supply pressure on certain analog chips, discrete devices, and specific types of memory chips. Prices of related products showed an upward trend, and lead times for some part numbers were significantly extended. Conversely, the consumer electronics sector, represented by smartphones and PCs, faced dual pressures from high memory costs and weak end-market demand, putting shipment volumes under pressure.
Regarding the supply chain, a magnitude 7.1 earthquake struck Kumamoto Prefecture, Japan, on July 28. Some local semiconductor factories took preventive measures to suspend operations for maintenance. After about two days of suspension, manufacturers such as Renesas and Sony confirmed that their production lines would resume operations sequentially in early August. Considering objective factors such as disrupted transportation and logistics post-earthquake, it is expected that there will be a certain degree of logistics and price fluctuations in the supply chain of some components in the short term.
Macro Market Overview
I. Recent Dynamics in the Chinese Market
1. Electronic Information Manufacturing Industry (January-June 2026)
In the first half of the year, China's electronic information manufacturing sector generally showed a relatively active expansion trend. The capacity utilization rate and IC production steadily improved, with upstream manufacturing capacity being effectively transformed into actual output, providing strong support for various downstream demands. Meanwhile, the industrial added value maintained a high growth rate, indirectly reflecting the benefits generated by the manufacturing of high-value-added products in the industrial chain.
1.1 IC Manufacturing Profits Surge by 2579.5% (January-June 2026)
In the first half of the year, the profitability of electronics-related industries significantly jumped, becoming one of the core engines driving the growth of industrial enterprise profits. Among them, the profits of the IC manufacturing and semiconductor discrete device manufacturing industries increased by 2579.5% and 31.2% year-on-year, respectively. The substantial growth in AI and computing power demand showed a clear driving effect, while the growth of basic components also maintained a moderate and steady momentum.
2. IC Exports (January-June)
In June, IC export volume reached 38.21 billion USD. In the first half of 2026, the total IC export value reached 177.28 billion USD, a year-on-year increase of 96.1%. The export value hit a historical high for a half-year period, already approaching the total figure for the entire year of 2025.
Lead Time Trends for Core Components
In July, lead times and prices generally showed an upward trend. Lead times for memory, discrete devices, and analog chips were universally and significantly extended, with lead times for some popular part numbers even exceeding 40-52 weeks. Passive components showed structural growth, with lead times for high-end MLCCs (Multi-Layer Ceramic Capacitors) being particularly tight. In terms of pricing, some memory, analog, and discrete devices basically showed a price increase trend. Passive components saw price adjustments on the capacitor and inductor sides. Purchasers need to strengthen inventory coordination with distributors and prioritize confirming orders for alternative parts and long-lead-time materials.
1. Analog Devices
Data source: Future Electronics, compiled by Xin San Ban
Lead times for most manufacturers showed signs of extension. ADI even issued warnings to customers in early July, stating that lead times for some products could be extended up to about six months, and advised customers to place orders more than half a year in advance to secure supply. On the pricing front, upward movement became the main theme, with price increases across most product lines from leading manufacturers, giving original manufacturers a certain degree of bargaining power.
2. Discrete Devices
Data source: Future Electronics, compiled by Xin San Ban
Lead times for basic components such as low-voltage MOSFETs, small-signal diodes, and transistors were generally extended, with some popular part numbers reaching 52 weeks or even longer. In terms of pricing, even if lead times for some manufacturers remained stable, their product prices were still raised, indicating that original manufacturers possess strong cost pass-through and bargaining capabilities.
3. Memory
Data source: Future Electronics, compiled by Xin San Ban
The supply chain is extremely tight. Lead times for the vast majority of categories showed a significant upward trend. Delivery cycles were generally extended to 26 weeks or even over 52 weeks. Some manufacturers allocate inventory on a monthly basis and are even unable to support the needs of new customers.
4. Passive Components
Data source: Future Electronics, compiled by Xin San Ban
Lead times for MLCCs (Multi-Layer Ceramic Capacitors) were generally extended, with lead times from some original manufacturers exceeding 24 weeks or even longer. In terms of pricing, prices for some capacitors, inductors, and filters from most manufacturers were raised.
Supply Chain Dynamics Analysis
1. IDM/Fabless
Memory, MCU (Microcontroller Unit), and passive components have triggered a wave of price increases, amid capacity shortages and the recovery of end-market demand; meanwhile, major companies are accelerating capital operations and the expansion of advanced capacity. Major memory manufacturers such as Samsung and Micron are seizing the initiative through price hikes and capacity expansion. The IPO of CXMT and the capital integration of YMTC also represent the accelerated evolution of the domestic memory industry.
2. Foundry/OSAT/Materials/Equipment
In terms of wafer foundry and OSAT, the focus is on price increases and capacity expansion. TSMC (Taiwan Semiconductor Manufacturing Company) has already negotiated quotes for 2027, which are expected to take effect in early next year. ASE has raised its OSAT quotes, and general capacity is becoming tight. In addition, a sudden fire at GlobalWafers' 8-inch production line in Italy led to a suspension of operations, which may exacerbate local supply pressure. Meanwhile, lead times for front-end equipment from companies like ASML have been significantly extended by 50%-100%, and subsequent capacity expansion across the entire industry chain may face equipment delivery bottlenecks.
3. Distributors
Net profits for some distributors generally increased by 50% to over 200% in the first half of the year, with profits of distributors deeply tied to memory and AI materials, such as Shannon Xinchuang, showing growth of over 20 times. Against the backdrop of the July market characterized by original manufacturer price adjustments, extended lead times, and structural shortages, distributors not only benefited from inventory accumulation, but their performance growth also indirectly reflects the substantial recovery of end-market stocking demand. However, whether this high growth can be sustained in the future still requires observing the actual end-market consumption and the final implementation of cost pass-through in the industry chain.
End-Market Demand Tracking
1. PC Shipments
According to the latest data from IDC, global PC shipments in the second quarter of 2026 decreased by 4.9% year-on-year to 68.2 million units.
The report points out that the key point in the PC market is the divergence between volume and price: shipments are declining, but revenue is climbing, because the speed at which manufacturers push up prices is faster than the decline in demand. Given the macroeconomic environment and the expectation that the memory shortage will not be alleviated until early 2028, this means that the growth rate in the second half of 2026 may slow down.
2. Smartphone Shipments
Data from the China Academy of Information and Communications Technology (CAICT) shows that in June, domestic smartphone shipments reached 19.149 million units, a year-on-year decrease of 15.3%. From January to June, domestic smartphone shipments totaled 133 million units, a year-on-year decrease of 5.5%.
Data released by IDC shows that global smartphone shipments in the second quarter of 2026 were 277.5 million units, a year-on-year decrease of 6.7%. This marks the second consecutive quarter of year-on-year decline.
Nabila Popal, Senior Research Director for Global Consumer Devices at IDC, stated: Memory costs have increased by nearly 300% compared to the same period last year, accounting for over 65% of the total bill of materials (BOM) cost in low-end models, making it increasingly unsustainable for manufacturers focused on low-end products. The second-quarter data fully confirms our previous judgment — this downturn is not evenly distributed across the entire market. The memory chip crisis benefits high-end brands while impacting manufacturers reliant on low-end models.
3. Passenger Vehicle/NEV Production and Sales
Data released by the China Passenger Car Association (CPCA) shows that from July 1 to 26, retail sales in the national passenger vehicle market reached 1.123 million units, a year-on-year decrease of 18% compared to the same period in July last year, and a month-on-month decrease of 13%. Year-to-date cumulative retail sales reached 9.824 million units, a year-on-year decrease of 20%. From July 1 to 26, retail sales in the national NEV (New Energy Vehicle) passenger vehicle market reached 738,000 units, a year-on-year decrease of 2% compared to the same period in July last year, and a month-on-month decrease of 10%. Year-to-date cumulative retail sales reached 5.443 million units, a year-on-year decrease of 13%. From July 1 to 26, the NEV retail penetration rate in the national passenger vehicle market reached 65.7%.
4. AI Servers
The latest forecast data from Sigmaintell shows that global AI server shipments in 2026 will reach approximately 3.7 million units, a year-on-year increase of 51.3%. In the main cost structure of AI servers, GPUs, DRAM, CPUs, etc., account for about 80% of the costs. Advanced computing power and memory chips are key components of AI servers. Relatively speaking, the demand drive from AI servers for global semiconductors may be even stronger.
Summary
Driven by the explosion in AI computing power demand, IDM original manufacturers of memory, power, and passive components have triggered a wave of cross-category price increases and capacity expansion. The performance of midstream distributors has generally achieved explosive growth, confirming the recovery of channel stocking demand and inventory dividends. However, downstream end-market demand is highly differentiated: AI servers have become the core engine for this round of component price increases, while traditional consumer electronics is limited by cost recovery. In the short term, the simultaneous increase in volume and price of components and structural shortages may continue. For components with beginning extended lead times, appropriately increasing safety stock is recommended to cope with the peak season demand in Q3. The medium- to long-term supply and demand trends still require observing the actual end-market demand absorption capacity.
Note: The article and referenced data are compiled from the National Bureau of Statistics, Future Electronics, IDC, and public information for communication purposes only. It does not constitute any advice and does not represent the stance of this account. Images are sourced from the internet, and all rights belong to the original authors.