The world will spend a staggering $1.3 trillion on semiconductors in 2026, marking the largest growth in two decades, market research company Gartner reported on Wednesday.

The figure shows a 64% year-over-year revenue increase for semiconductor companies, and it’s not just AI chips doing the heavy lifting.

According to Gartner, memory chips and networking capabilities will play a major role in the ongoing boom.

“Amid high demand for AI processing, data center networking and power, and memory price inflation (memflation), the semiconductor industry is projected to achieve a third consecutive year of double-digit growth in 2026 — a milestone that underscores the sector’s pivotal role in the AI technology stack,” Gartner senior principal analyst Rajeev Rajput said in a statement.

Memflation refers to the continuing price hikes on memory chips needed to power AI servers. Only a small number of companies make memory semiconductors, including Micron (MU), Samsung (005930.KS), and SK Hynix (000660.KS).

And because data center memory carries higher margins than consumer-grade memory, those companies are focusing on producing data center memory chips rather than those that slot into laptops or smartphones.

Micron, for example, killed off its Crucial consumer memory brand to focus more on data center chips, which have been a boon for the company.

In its March earnings report, Micron announced earnings per share (EPS) of $12.20 on revenue of $23.86 billion. That amounts to an EPS increase of 682% year over year and a revenue jump of 196%.

Wall Street was anticipating EPS of $9.00 on revenue of $19.7 billion year over year.

Micron stock is up 104% over the last six months and 512% over the last 12 months. Shares of rival SK Hynix are also up more than 500% over the last year.

Storage chip maker Western Digital (WDC)? That company’s stock is up a whopping 920%.

But the memory crunch is also putting the squeeze on consumer electronics companies, which now have to fight for a smaller amount of memory.

According to Gartner, memory prices will increase 125% in 2026, while storage chip prices will climb 234%.

“Memflation will destroy, or at least delay, non-AI demand into 2028, to varying degrees depending on the application,” Rajput said.

“Technology suppliers should prepare for higher prices during the first half of 2026, followed by persistent but moderating price increases throughout the rest of the year. CIOs and IT leaders should be cautious about signing supply agreements with unfavorable pricing terms that extend beyond 2027.”

Email Daniel Howley at dhowley@yahoofinance.com. Follow him on Twitter at @DanielHowley.

Click here for the latest technology news that will impact the stock market

Read the latest financial and business news from Yahoo Finance