October 2025 shattered expectations: global semiconductor sales jumped 32.6% YoY (WSTS), the fastest annualised growth since the Covid frenzy, eclipsing even the August 2024 cyclical peak. Integrated circuits led the charge with a blistering 36.7% increase, powered by a dramatic reversal in Memory (+58.4% YoY), which reclaimed its traditional role as the market’s primary growth engine after a brief non-memory interlude.
The Memory surge is textbook pig-cycle behaviour: AI-driven HBM and server NAND demand collided with constrained supply, triggering shortages, allocation battles, and aggressive contract price hikes. Suppliers are openly prioritising hyperscalers, leaving PC and consumer OEMs scrambling and forcing SSD and DRAM prices relentlessly higher. Spot and contract markets are now rising in lockstep, with no relief in sight until late 2026 at the earliest.
Logic remains astonishingly strong at +37.2% YoY, but the composition is disturbing: ASPs soared 48.2% while units actually declined 7.4%. This is monopolistic pricing power in action, courtesy of TSMC’s near-total grip on leading-edge nodes. The first crack appeared in November when Apple quietly began qualifying Intel for entry-level M-series chips, an early move that could eventually reshape the foundry landscape.
Overall IC ASPs punched through the US$2.00 barrier for the first time since May 2022, reaching US$2.02 (+9.6% MoM, +24.2% YoY). History is unambiguous: sustained ASP-led growth always collapses, either when new capacity floods the market or when prices become unsupportable and demand evaporates.
Unit shipments, the only true measure of underlying health, are still 5% below the 2022 peak and the long “inventory repayment” appears to have plateaued. The broader economy offers no safety net: U.S. manufacturing is contracting for the ninth straight month, unemployment is rising, consumer sentiment is near historic lows, and Trump’s tariff war is accelerating global slowdown fears.
CapEx remains dangerously elevated at 17.1% of sales (well above the 14% long-term safe level), with China accounting for 36.6% of front-end spending despite producing far less than its capacity ambitions justify. When the AI infrastructure party eventually slows, the industry will face massive overcapacity in both leading-edge and mature nodes.
Future Horizons’ verdict is blunt: the current boom is frothy, bifurcated, and overwhelmingly price-driven. While 2026 may still deliver strong numbers, the seeds for the next severe downturn are already firmly planted. As Malcolm Penn warns, “ASP-driven booms always end badly.” Investors, OEMs, and suppliers ignore that lesson at their peril.
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