This article reviews the structure and latest trends in semiconductor-related stocks and examines key themes and developments centered on AI, diamond semiconductors and domestic production. It outlines a market environment in which multiple tailwinds are advancing simultaneously, including growing demand for generative AI and data centers, government policies promoting domestic production and the commercialization of next-generation materials.
The semiconductor market is forecast to expand to approximately $50.2 billion in 2026, representing expected growth of approximately 11.9% from 2025. Four structural shifts are driving this growth: rising demand for generative AI and data centers, economic security and domestic production, competition to commercialize next-generation power semiconductor materials, and the convergence of optical and electrical technologies. As data centers grow larger, demand for GPU servers and capital investment are surging, with the combined investment of the four hyperscalers reaching a level 58% higher year on year as of 2024.
Efforts to strengthen the entire semiconductor supply chain through domestic production and economic security are also accelerating. In Japan, TSMC’s Kumamoto fab began operations in December 2024, while preparations for Rapidus’s 2nm mass production are also progressing. METI has outlined a policy of treating the strengthening of Japan’s domestic manufacturing base for next-generation semiconductors as its highest-priority issue, and suppliers of equipment, materials and components are expected to benefit over the long term.
In next-generation power semiconductor materials, competition to commercialize SiC, GaN and Ga2O3 is intensifying, while diamond semiconductors are approaching a commercialization milestone in 2026. As demand expands for automotive EV drive inverters and power control for AI servers, SiC and GaN are expected to see broader adoption in high-temperature and high-voltage applications. In optical-electrical convergence, photon-based technologies are gradually gaining ground against the backdrop of NTT’s IOWN concept. Sumitomo Electric Industries is also pursuing a development effort that spans both themes through GaN transistors on diamond substrates.
In semiconductor stock investing, equipment and testing companies are directly linked to the current capital investment cycle, while wafer materials stocks can experience sharp price swings as supply and demand fluctuate. Diamond semiconductors and optical-electrical convergence are viewed as strongly future-oriented themes, and many related stocks are still awaiting growth in actual demand. Among domestic production-related stocks, orders for peripheral suppliers are expected to increase as Rapidus moves toward full-scale mass production.