Summary: In-depth analysis of structural changes in the semiconductor market in H2 2026, revealing the industry trend of widening gap between mature and advanced processes, and its impact on investment decisions in SGX tech stocks.
In the second half of 2026, the global semiconductor industry is undergoing a profound structural transformation. With the continued expansion of applications such as artificial intelligence, 5G communications, IoT, and automotive electronics, the semiconductor market is showing an unprecedented pattern of differentiation. On one hand, advanced process capacity remains tight with firm prices; on the other hand, the mature process market is facing supply-demand rebalancing with subtle price changes. This structural differentiation is reshaping the global semiconductor industry chain and having a profound impact on investment decisions.
Market Landscape: Deepening Dual-Track System and Structural Differentiation
According to the latest industry data, global semiconductor sales in Q3 2026 increased by 19.2% year-on-year, reaching a record $185 billion. However, this growth is not evenly distributed but shows a clear "dual-track" characteristic. Capacity utilization for advanced process (7nm and below) chips remains above 95%, while mature processes (28nm and above) hover in the 75%-80% range.
This differentiation is driven by fundamental changes in end-demand. Applications such as AI training, high-performance computing, and data centers continue to show strong demand for advanced process chips, pushing foundry giants like TSMC and Samsung to continuously expand advanced capacity. Meanwhile, demand for mature process chips in consumer electronics, IoT, and traditional automotive electronics remains relatively stable, with some areas even showing signs of saturation.
Advanced Processes: AI-Driven Structural Shortage
The advanced process market is experiencing unprecedented demand growth. The popularization of generative AI applications like ChatGPT and Midjourney, along with the development of emerging technologies such as autonomous driving and edge computing, is driving exponential growth in demand for high-performance computing chips. According to industry analysts, in the second half of 2026, the lead time for 7nm and below advanced process chips is expected to extend to 26-30 weeks, further lengthening from the beginning of the year.
As the global leader in advanced processes, TSMC's 3nm and 5nm capacity is essentially locked by major customers like Apple, NVIDIA, and AMD until 2027. Samsung Electronics is also accelerating the development of 2nm processes, planning to achieve mass production by 2027. This capacity shortage situation is expected to continue until 2028, with advanced process chip prices likely to remain firm or even increase further.
Mature Processes: Supply-Demand Rebalancing and Price Stabilization
In stark contrast to the boom in advanced processes, the mature process market is undergoing a supply-demand rebalancing process. After the destocking cycle of 2022-2023, mature process inventory levels have fallen to a healthy range. In the second half of 2026, 12-inch mature process quotes have stabilized and risen for three consecutive months, indicating a possible structural reversal in the market.
The recovery of the mature process market is mainly driven by three factors: first, the acceleration of automotive electronics electrification, with continuous growth in demand for automotive-grade MCUs and power semiconductors; second, the advancement of industrial IoT and Industry 4.0, driving increased demand for industrial control chips; third, the expansion of mature process applications in areas such as AI inference chips and smart home appliances.
Industry Chain Restructuring: Strategic Shift and Regional Diversification
Changes in the semiconductor supply-demand landscape are triggering profound restructuring of the industry chain. Major global chip manufacturers are adjusting their strategic focus to adapt to the new market environment.
Strategic Adjustments by Foundry Giants
TSMC is accelerating the development of "2nm+" processes and plans to establish advanced process capacity in Arizona, USA, and Dresden, Germany, to achieve regional diversification. At the same time, TSMC is increasing investment in mature processes, planning to increase 28nm capacity by 15% in 2026 to meet growing mature process demand.
Samsung Electronics is focusing on the mass production of 3nm GAA processes and the development of 2nm processes, while consolidating its position in the mature process market through acquisitions and expanded investment. Chinese mainland foundries like SMIC are focusing on mature processes and specialized technologies, gradually increasing market share through technological iteration and capacity expansion.
Structural Changes in Equipment and Material Markets
The semiconductor equipment market shows a clear trend of differentiation. Demand for advanced process equipment is strong, with ASML's EUV lithography machine delivery cycle extended to over 24 months, and advanced process equipment orders for vendors like Applied Materials and Lam Research are full. In contrast, the mature process equipment market is relatively moderate, with some mature process equipment even facing oversupply.
The semiconductor materials market also shows a similar trend. Prices for advanced process materials such as electronic specialty gases and photoresists continue to rise, while mature process materials like silicon wafers remain relatively stable. This differentiation is prompting material suppliers to adjust product mix and capacity layout, increasing R&D investment in advanced process materials.
SGX Tech Stock Investment Opportunities: Capturing Structural Differentiation Dividends
Structural changes in the semiconductor market have created new opportunities for tech stock investors on the Singapore Exchange (SGX). According to the latest market analysis, the following types of SGX-listed semiconductor companies are worth attention:
- Advanced Process Equipment and Material Suppliers: With continuous capacity constraints in advanced processes, SGX-listed companies providing advanced process equipment and materials to TSMC, Samsung, etc. are expected to achieve sustained growth.
- Specialized Process Chip Design Companies: Chip design companies focusing on automotive electronics, industrial control, and other fields will benefit from the mature process market recovery, with steady performance improvements expected.
- Semiconductor Distribution and Value-Added Service Providers: As the complexity of the chip supply chain increases, the value of companies providing professional distribution and value-added services becomes more prominent.
- Semiconductor Testing and Packaging Service Providers: Growing demand for advanced packaging brings new business opportunities for testing and packaging service providers.
Investment Strategy Recommendations
Facing the structural differentiation in the semiconductor market, investors should adopt differentiated investment strategies:
- Focus on Long-Term Growth Logic: The growth in demand for semiconductors from emerging applications like AI, autonomous driving, and IoT is a long-term trend, with related industry chain companies having long-term investment value.
- Grasp Cyclical Opportunities: The mature process market may have entered a cyclical recovery phase, and timely investment in related companies could yield excess returns.
- Pay Attention to Regional Diversification Opportunities: As the trend of regional diversification in the semiconductor industry chain strengthens, companies with presence in regions like Southeast Asia are worth attention.
- Diversify Investments to Reduce Risk: The semiconductor industry is highly volatile, and it is recommended to reduce risks associated with single companies or segments through diversified investment.
Future Outlook: 2027 Semiconductor Market Trend Predictions
Looking ahead to 2027, the semiconductor market will continue the trend of structural differentiation but may see some new changes:
Technological Evolution and Competitive Landscape
Competition in advanced processes will become more intense. TSMC, Samsung, and Intel will engage in fierce competition in 2nm and below processes, while advanced packaging technologies like Chiplets will become important means to compensate for the limitations of advanced processes. In the mature process sector, specialized processes and differentiated competition will become key, with companies needing to win market share through technological innovation and cost advantages.
Supply-Demand Rebalancing
With capacity expansion by major manufacturers, the tight situation in advanced processes is expected to gradually ease in the second half of 2027. The mature process market may enter a moderate recovery phase with balanced supply and demand. This change will reshape the pricing power and profit distribution landscape of the semiconductor industry chain.
Continued Geopolitical Impact
The geopolitical impact on the semiconductor industry will continue to deepen. Governments will continue to increase support for domestic semiconductor industries, and the trend of regional diversification in the industry chain will further accelerate. As a center of the semiconductor industry in Southeast Asia, Singapore's strategic position will be further enhanced, and SGX-listed semiconductor companies will benefit from this trend.
Overall, the semiconductor market in the second half of 2026 is in a critical period of structural transformation. Investors need to deeply understand industry trends, grasp investment opportunities brought by structural differentiation, while being vigilant about potential risks, in order to obtain stable returns in the complex semiconductor market environment.
