BofA raises semiconductor TAM to $1.3T

Bank of America raised its 2026 global semiconductor revenue forecast to $1.3 trillion in an April 8 note, up from $1.0 trillion four months earlier, as the bank increased its estimates for AI and data-center demand. The bank said the market could reach $2 trillion by 2030, implying about 20% compound annual growth through the end of the decade. Analyst Vivek Arya said AI and data centers would drive “the majority of gains,” with industrial demand also contributing through inventory replenishment and robotics. U.S. producer-price data published on May 13 added a second data point behind that view. The Producer Price Index for semiconductor and other electronic component manufacturing rose to 73.467 in April 2026, according to Bureau of Labor Statistics data carried by the St. Louis Fed. That was up about 7.6% from March and 26.0% from April 2025, based on the monthly index levels. (finance.yahoo.com) ### Why did Bank of America lift the market forecast so sharply? Bank of America said AI infrastructure spending was rising fast enough to justify a $300 billion increase in its 2026 semiconductor forecast. Arya wrote that AI and data centers would account for most of the industry’s gains through compute, networking and memory, while industrial markets would add support as inventories normalized and robotics demand increased. (fred.stlouisfed.org) The same note said Nvidia, Broadcom, Marvell and Advanced Micro Devices were among the main drivers of that expansion. Bank of America also pointed to opportunities in chip equipment and design software, naming Applied Materials, Lam Research, Cadence and Synopsys as beneficiaries of more complex chip designs and heavier AI-related investment. (finance.yahoo.com) ### What does the producer-price jump say about conditions inside the chip industry? April’s semiconductor PPI reading of 73.467 was the highest level in the current series on FRED, which runs through data updated on May 13. The month-to-month and year-over-year increases indicate that chipmakers were receiving higher prices for their output at the factory gate than they were a month and a year earlier. (finance.yahoo.com) Those price moves do not by themselves show which companies capture the benefit. But they do line up with Bank of America’s argument that pricing power is shifting toward parts of the semiconductor market tied most directly to AI systems, especially where supply remains constrained. That is an inference from the bank’s sector note and the government price data taken together. (fred.stlouisfed.org) ### Why are analysts highlighting memory companies such as Micron? Micron became a focus after Bank of America nearly doubled its price target on the stock to $950 from $500 in a May 14 note shared with TheStreet. The firm kept a Buy rating and tied the move to stronger long-term demand for AI memory, particularly high-bandwidth memory used alongside AI accelerators in data centers. (finance.yahoo.com) TheStreet reported that Bank of America’s Micron call was tied to a broader reassessment of the addressable market for AI systems and memory demand. The article said the bank raised its estimate for the 2030 AI data-center systems market to about $1.7 trillion from $1.4 trillion, and argued that every major AI accelerator deployment requires high-bandwidth memory. (thestreet.com) ### Where does that leave the rest of the chip market? Bank of America said the gains were not evenly distributed across semiconductors. The bank modeled a 43% year-over-year jump in compute and storage while expecting a 9% decline in wireless communications, reflecting stronger demand for AI hardware than for traditional consumer electronics such as smartphones and PCs. (thestreet.com) June 11 is the next scheduled release date for the U.S. semiconductor producer-price series, according to the St. Louis Fed page for the index. Investors will also be watching whether memory suppliers such as Micron continue to benefit from the pricing and demand trends Bank of America described. (fred.stlouisfed.org) (finance.yahoo.com)