As traditional silicon is pushed to its limits by the rapid growth of AI, in 2026 the industry will pivot to architectural and material breakthroughs.
This year the semiconductor industry will continue to grow at an unprecedented pace as the global appetite for AI applications pushes our technical capabilities to the limit. This will usher in a new era of ‘efficiency’ to replace the ‘brute force’ approach of the past decade. Semiconductor companies will need to think differently and develop smarter approaches to solve the huge energy demands being placed on our aging infrastructure.
Here are five key semiconductor trends to look out for in 2026.
1.Neuromorphic Computing
With data centres consuming a larger proportion of global electricity supplies, the industry is looking to nature for inspiration — specifically the human brain.
Neuromorphic chips, inspired by the neurons and synapses of the brain, are fundamentally different to traditional silicon chips. They bring separate memory and processing tasks onto a single chip, increasing speed and reducing energy use in the process. They will be better at dealing with unstructured ‘messy’ data and will support applications ranging from speech and facial recognition to medical diagnostics.
Academics at UCL are leading the charge in this area, having recently been awarded funding to lead an Innovation and Knowledge Centre (IKC) to speed up the commercialisation of neuromorphic tech.
2.Photonic Integrated Circuits (PICs)
Once niche components used mainly in long-haul telecommunications, photonic integrated circuits (PICs) are now foundational to modern AI and data centres. PICs use light instead of electricity to transmit data and are now routinely used in pluggable transceivers to speed up data processing and communication between servers.
We’re now seeing more developments in co-packaged optics (CPO), whereby the PIC-based "optical engine" is placed right next to the main switch CPU as opposed to having the entire transceiver in the plug, increasing speed, efficiency and reliability.
Just last year, Nvidia launched two new platforms based on CPO – Spectrum-X Photonics and Quantum-X Photonic – so expect to see widespread adoption in 2026.
3.Advanced Packaging
For decades, performance gains came from making monolithic chips where everything was on one piece of silicon. In 2026, we will see more progress in the field of heterogeneous integration, the process of combining different specialised chips into a single package.
We will see manufacturers stacking memory and logic dies directly on top of each other (known as 2.5D and 3D packaging) to achieve higher data density and significantly lower power consumption.
Another IKC led by the University of Sheffield is coordinating UK expertise in this area and advancing technical developments.
4.Compound Semiconductors
Whilst compound semiconductors such as silicon carbide (SiC) and gallium nitride (GaN) continue to offer unparalleled performance gains in electric vehicles (EV) and renewable energy, in 2026 we expect to see an increased focus on solving the energy ‘bottleneck’ in data centres.
Several proposals are being explored, including installing ultra-efficient GaN-based power supply units (PSUs), developing 800V DC distribution directly to the rack and implementing decentralised DC microgrids.
Also keep an eye out for SiC-enabled solid-state transformers (SST) that will offer "smart" solutions to power conversion and significantly reduced energy losses.
5.Distributed Edge AI
The most significant shift in AI architecture for 2026 will be the move from centralised cloud processing to distributed intelligence at the ‘edge’.
Rather than just running pre-trained models, the next generation of chips will be capable of "on-device training", allowing smartphones, industrial robots, and medical wearables to learn from local data without ever sending it to a cloud server.
In 2026, expect to see software catch up with the rapid growth of sophisticated edge AI hardware and unlock the huge potential of this technology across a range of industries, from healthcare and defence to manufacturing and cybersecurity.