Written by: Rita

The total potential market size of the semiconductor industry will reach $3.2 trillion by 2030. Bank of America raised its forecast for the total potential market size of the semiconductor industry from $2.7 trillion to $3.2 trillion in a report on the U.S. semiconductor industry published on September 14, 2026, and increased the compound annual growth rate from 14% to 18% from 2026 to 2030. Memory chips and data centers are the main driving forces, while the recovery in the automotive and industrial sectors provides additional support. The industry took 50 years to reach $1 trillion in sales, and now the potential market size is expected to double again from $1.7 trillion in four years.

Bank of America analyst Vivek Arya pointed out in the report that the AI industry is shifting from seeking investment returns to addressing structural constraints such as chip and power supply. The shortage of memory chips and rising prices remain key growth factors. Despite increasing concerns about a slowdown in investment in AI infrastructure, there are no signs of a slowdown in customer orders, long-term agreements, capacity commitments, or semiconductor product pricing.

Semiconductor TAM will double in four years

Bank of America expects semiconductor sales to grow by 113% year-over-year in 2026, with core semiconductors growing by 30%. Memory chips are performing even stronger, with sales expected to grow by approximately 327% year-over-year. DRAM is expected to grow by 328%, while NAND is expected to grow by 341%. The computing and storage business is expected to grow by more than 50%, and server demand remains strong.

By end-market segmentation, wireless communication is expected to decline by 8% year-over-year, influenced by weak smartphone sales. Automotive is expected to grow by 12% year-over-year, industrial is expected to grow by 32%, consumer electronics is expected to decline by 7%, and wired communication is expected to grow by 29%. Memory sales are projected to reach $937 billion in 2026, while core semiconductors are expected to reach $739 billion.

WFE raised to $270 billion

Bank of America has raised its forecast for wafer manufacturing equipment spending in 2026 to $156 billion, up 33% year-over-year. The 2027 forecast has been raised to $210 billion, up 34% year-over-year. The 2028 forecast has been raised to $272 billion, up 30% year-over-year. DRAM is the main growth driver, with the 2027 forecast raised by 21% to $52 billion, and the 2028 forecast raised to $81 billion. NAND's forecast for 2027 has been raised by 19% to $20.5 billion.

Bank of America predicts that new cycle capital expenditures from 2025 to 2030 will reach $360 billion, with a compound annual growth rate of 25%. DRAM capital expenditures are projected at $114 billion, NAND at $30 billion, and foundry and logic chips at $215 billion. In 2026, China's foundry equipment spending is expected to reach $45 billion, accounting for 29% of the global total, dropping to about 20% by 2030.

Leasing prices confirm strong demand

The current spot leasing price for NVIDIA B200 GPUs is approximately $5.72 per hour, having risen continuously over the past two months and is only about 10% lower than the peak of $6.10 in March. The A100 leasing price is about $1.60, while the H100 is approximately $2.65. Bank of America points out that the sustained high leasing prices indicate that market demand is strong and broad, with no signs of slowing down.

Bank of America believes that 2027 will still be a year of full orders and ample contracts for all computing, networking, and memory suppliers. The market is expected to remain tight in 2028, benefiting from increased demand for CPU, XPU integration, and optical expansion technology, with the AI accelerator business of several ASIC and GPU manufacturers also speeding up development.

Valuations are attractive

The semiconductor index has risen by 67% this year, but the forward price-to-earnings ratio is 18 times, lower than the S&P 500’s 19 times. Earnings per share have grown by 139% year-over-year, approximately seven times the market's growth rate. Bank of America maintains a cautious stance ahead of the midterm elections and alleviation of macroeconomic concerns. Recently, the index has retraced about 17% as investors reassess the sustainability of AI.

Bank of America expects that computing chips, networking chips, and analog chips will show greater resilience. If market momentum recovers, Micron, Rambus, Applied Materials, and Intel are expected to lead the upward trend. Bank of America targets a price of $620 for AMD, $500 for Analog Devices, $650 for Applied Materials, $145 for Intel, $385 for Rambus, $365 for Marvell Technology, $1550 for Micron, and $350 for NVIDIA.

On the risk side, average selling price declines exceeding expectations, intensified competition from new entrants in China, market share taken by large competitors, and weak demand in end markets like data centers and smartphones are major downside risks. Upside risks include technological breakthroughs, increased flash memory market share, and NAND upgrades.

The semiconductor TAM will double in four years, with foundry equipment spending being adjusted upwards simultaneously. Bank of America believes the AI-driven demand has not yet peaked.

Disclaimer

This article is a compilation and interpretation by Trend Research of a third-party brokerage research report (Bank of America, September 14, 2026), combined with public market information. The ratings, target prices, earnings forecasts, and related judgments quoted in this article are the views of the analysts at that brokerage and represent only the position of their institution, not the views of Trend Research, and do not constitute any investment advice.

The market involves risks, and decision-making should be independent. This article should not be used as the basis for buying or selling any securities.