Q3 2026 Quarterly Market Insights[1] - Flipbook - Page 5
End-Market Pulse
Geopolitics, Trade & New Technology
The supply chain is being redesigned around materials as much as wafers. US polysilicon measures,
Chinese controls on strategic materials and continued technology restrictions are increasing the value
of regional sourcing and inventory buffers. At the technology level, Microsoft’s planned Maia 300, nextgeneration AI racks and advanced packaging demonstrate a broader shift towards custom silicon and systemlevel optimisation.
Automotive and EVs: Recovery, But Increasingly Regional
Global EV sales rose 9% year-on-year in July to 1.85 million units, although growth is diverging sharply by
region, with Europe expanding while China and North America softened. Semiconductor content continues to
rise through electrification, ADAS, power management and vehicle connectivity, keeping automotive demand
structurally relevant despite uneven unit growth.
Automotive semiconductor demand should improve through H2, but regional EV policy and pricing will
determine the pace of recovery.
Industrial and Automation: The Quiet Recovery
Industrial semiconductor demand is moving from inventory correction towards recovery, particularly in power
management, analogue, connectivity and automation. Texas Instruments expects Q3 revenue above market
expectations, citing improving industrial and automotive demand alongside AI infrastructure, while Microchip
is seeing recovery across industrial, automotive, aerospace and defence.
Defence and Aerospace: Geopolitics Is Creating Semiconductor Demand
Defence and aerospace are becoming increasingly important semiconductor growth drivers as governments
raise spending amid geopolitical instability. Microchip specifically cited stronger aerospace and defence
demand in its latest outlook, linking the improvement to both sector recovery and increased geopolitical
spending.
Consumer Electronics: AI Is Raising the Cost of the Bill of Materials
Consumer electronics is facing an unusual squeeze where demand remains relatively fragile while component
costs are rising. Apple has already increased MacBook and iPad pricing after memory costs surged,
demonstrating that the AI-driven memory cycle is now flowing directly into finished-product pricing.
Healthcare: Semiconductor Content Continues to Expand
Medical equipment remains a relatively resilient semiconductor end market as imaging, monitoring,
diagnostics, connected devices and AI-assisted healthcare increase silicon content. The sector is less exposed
to consumer-style demand swings, but continues to require long product lifecycles, high reliability and stable
component availability.
General Market Insights
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