TLDR
- UBS projects wafer fab equipment (WFE) sector revenue could surge to $250 billion by 2028 in what may become a supercycle
- Major players including Micron, Samsung, and SK Hynix are launching new fabrication facilities to address cleanroom capacity constraints
- Mizuho boosted Sandisk’s price target to $2,200 while also increasing projections for Seagate and Western Digital
- DRAM consumption expected to surge 27% year-over-year in 2026, primarily fueled by artificial intelligence workloads
- Google’s TPU deployments projected to soar past 35 million units by 2028, jumping from approximately 4.3 million in 2026
Memory semiconductor manufacturers are accelerating production expansion, and Wall Street analysts from two prominent firms point to artificial intelligence demand as the primary catalyst.
Timothy Arcuri, an analyst at UBS, indicated this week that the wafer fab equipment sector — which produces the machinery essential for chip manufacturing — may be entering the initial phases of a supercycle. His forecast suggests total WFE revenue could climb to $250 billion by 2028.
Arcuri anticipates WFE revenue will expand 27% during the current year to reach $147 billion. He forecasts an additional 35% increase in 2027, bringing the total to approximately $200 billion.
The primary catalyst is fresh fabrication capacity becoming operational. Micron, Samsung, and SK Hynix are all launching operations at newly constructed manufacturing facilities. This expansion is alleviating constraints in cleanroom availability, the specialized environments where semiconductor chips are produced.
Clients are now providing equipment vendors with demand forecasts extending up to eight quarters ahead. According to Arcuri, this degree of long-range planning represents an unprecedented development in his nearly three-decade career analyzing the semiconductor industry.
Memory Equipment Investment Accelerates Sharply
Revenue derived from machinery used in DRAM and NAND memory chip production is anticipated to climb 50% this year. Meanwhile, equipment for logic semiconductors, manufactured by firms such as Taiwan Semiconductor and Intel, is projected to increase 12%.
UBS elevated its memory WFE revenue projection for the following year by $10.5 billion. A significant portion of the emerging capacity focuses on DRAM production, propelled by extended supply contracts. NAND capacity investments are expected to accelerate beginning in the latter half of 2028.
Arcuri expressed preference for Lam Research and Applied Materials among equipment manufacturers. He considers KLA’s current valuation premium as limiting potential gains. Shares of Applied Materials and KLA both advanced Tuesday despite broader semiconductor sector weakness.
ASML, the Netherlands-based producer of extreme ultraviolet lithography systems, is forecast to achieve over $46 billion in systems revenue next year — a figure Arcuri cites as validating his comprehensive WFE projections.
Mizuho Elevates Price Targets Throughout Memory Space
In a separate development, Mizuho Securities increased its price objective for Sandisk to $2,200 from $1,825, maintaining an Outperform rating. The investment firm simultaneously raised Seagate’s target to $1,090 from $875, and boosted Western Digital’s objective to $685 from $550.
Mizuho analyst Vijay Rakesh forecasts DRAM consumption will expand 27% year-over-year in 2026 and 24% in 2027. NAND consumption is projected to increase 18% in both annual periods.
Shipments of Google’s Tensor Processing Units are anticipated to exceed 35 million units by 2028, climbing from around 4.3 million in 2026. Broadcom, serving as a critical design collaborator for Google’s TPU and OpenAI’s forthcoming chip, is expected to generate AI-related revenue reaching $122 billion in 2027 and $170 billion in 2028.
Sandisk commenced trading Monday at $1,982 and appreciated approximately 5.69% after the analyst upgrade. Its price-to-earnings ratio currently registers at 58.32 times, significantly exceeding its historical median of 29.61 times.
The PHLX Semiconductor Sector index has advanced 73% year-to-date despite Tuesday’s modest decline.
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