Asia’s semiconductor industry is entering a new era of growth and price pressure as rising demand for artificial intelligence chips fuels both record capital expenditures and widespread price increases. According to Nikkei Asia, leading chipmakers, packaging firms, and testing service providers across South Korea, Taiwan, Japan, and China plan to spend over $136 billion in 2026—a jump of more than 25 percent from last year—as companies scramble to expand capacity and meet surging demand.
Smaller chip suppliers, many of which had not raised prices since the market correction of late 2022, are now increasing rates for the first time in years. Vanguard International Semiconductor, a TSMC-affiliated manufacturer of less advanced chips, plans a 5 percent price increase in the first quarter of 2026, followed by further hikes of 10 to 15 percent, citing strong demand for power-related AI chips. Vanguard Chairman Leuh Fang emphasized that rising costs for expanding capacity and building new plants make higher pricing unavoidable, while pledging collaboration with clients to achieve a “win-win” outcome.
Other Taiwanese suppliers, including Unimicron and Winbond Electronics, are also raising prices alongside record-level spending. Unimicron, the world’s largest chip substrate supplier, has increased its 2026 capital expenditure from NT$25.4 billion to NT$34 billion to expand capacity for high-end AI substrates. Winbond, specializing in NOR flash and legacy DRAM chips, plans NT$42.1 billion in spending—almost eight times last year’s amount—and expects first-quarter price hikes exceeding 30 percent.
The AI boom is generating a “spillover effect” that benefits not only top-tier chipmakers but also mid-sized suppliers, packaging houses, and testing providers. Companies such as ASE Technology, King Yuan Electronics, and Powertech Technology are racing to secure production-ready capacity, which is now in high demand from clients like Nvidia, AMD, and MediaTek. Powertech President Boris Hsieh noted that fully booked packaging houses are turning away mid-sized clients due to limited availability, underscoring the unprecedented pressure on the supply chain.
Memory and power-related components are also affected. For instance, a single Nvidia GB200 AI server rack requires roughly 120 NOR flash chips, equivalent to the demand from 120 personal computers, highlighting the enormous appetite for supporting components in AI data centers. Nanya Technology and Delta Electronics are dramatically increasing capital expenditure, with Delta spending NT$46.1 billion in 2026 and scouting new plant locations to meet projected demand through 2028.
While the sector anticipates a bumper year, executives warn of uncertainties, including supply chain constraints, construction and labor shortages, and infrastructure limitations. Nevertheless, analysts say the combination of robust AI demand, supply shortages, and aggressive investment is reshaping the Asian semiconductor landscape, creating a favorable pricing environment and positioning the industry for long-term growth.
