TAIPEI, Sept. 3, 2025 /PRNewswire/ — Semiconductor and electronics supply chains are undergoing a major transformation, driven by the rapid growth of artificial intelligence (AI), changing market leadership, and global supply chain relocation, according to DIGITIMES.
Credit: DIGITIMES ASIA (PRNewsfoto/)
DIGITIMES vice president Eric Huang highlighted the shift in global industry power before and after the generative AI boom. In 2018, five technology companies ranked among the world’s top ten by market capitalization. By mid-2025, nine of the top ten are technology firms. These firms all involve semiconductor, including semiconductor leaders Nvidia, Broadcom, and TSMC(2330.TW), and tech giants Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla, which integrate both software and hardware, and design their own chips.
Huang pointed to Taiwan and China’s changing roles in contract manufacturing. In 2018, Taiwanese firms accounted for 78% of revenue among top original design manufacturers (ODMs) and electronics manufacturing services (EMS) companies, while China’s share stood at 6.4%. By 2024, Taiwan’s share fell to 65% as Chinese suppliers expanded to 22%, fueled by consumer electronics orders. In early 2025, however, Taiwan’s share rebounded to 70%, driven by rising demand for AI servers from hyperscalers and Nvidia.
In the semiconductor sector, fabless companies have gained ground. Nvidia’s chip revenue reached US$72 billion in 2024, giving it a 12% global share. TSMC remains the largest semiconductor company by revenue, with a 55% share in the global foundry market. Chinese foundries such as SMIC and Huahong are growing, with compound annual growth rates (CAGR) of 17.6% and 12.3% respectively, though they remain behind in advanced logic processes.
Huang described three “battlefields” shaping the technology landscape: supply chain relocation under the US-China rivalry, cloud and AI infrastructure, and edge AI. The first reflects a division of production capacity along geopolitical lines. Many firms have adopted “China+1” strategies, relocating assembly to Vietnam, India, and Mexico.
The second battlefield is the cloud. Nvidia’s GPUs have overtaken Intel’s Xeon CPUs and AMD’s processors as the dominant platform for AI workloads. DIGITIMES forecasts AI servers will account for 12% of global server shipments this year, with high-end AI systems growing 44% annually to 1 million units. TSMC’s AI accelerator chip revenue is expected to grow at a 45% annual rate through 2029, reaching US$86.5 billion.
The third battlefield, edge AI, is expanding into devices such as PCs, AI workstations, smartphones, smart appliances, and industrial equipment. Huang predicted Chinese manufacturers will dominate consumer electronics-based edge AI, while Taiwanese suppliers will focus on data security and enterprise-oriented devices, such as computing and network devices.
Credit: AFP
Global server EMS shifts toward the US, but Asia remains the backbone of AI server supply chains
DIGITIMES analyst Yen Chou added that global server EMS production is rapidly changing, but reliance on Asia remains. Taiwanese firms, including Foxconn, Quanta, Wistron, Inventec, and Mitac, have expanded facilities in Texas, California, and Tennessee. These US plants, however, still depend heavily on components from Asia, like Taiwan, China, Malaysia, and Vietnam.
Chou said most AI servers using Nvidia’s H200 GPUs undergo critical assembly processes in Taiwan, though US capacity is rising. Even with TSMC’s Arizona fabs and Amkor’s fabs, advanced packaging will not be available before 2027, requiring GPUs to be shipped back to Taiwan for final processing. This creates a continued US trade deficit with Taiwan in the near term.
Meanwhile, Chinese suppliers remain embedded in US supply chains, providing printed circuit boards, casings, and mechanical parts. Chou noted that imports from Chinese and Vietnamese plants surged earlier this year following new US duties on steel and aluminum.
However, since June 2025, there has been a noticeable increase in the export of mechanical components from Vietnam and Malaysia to the US. Whether this shift represents a long-term trend remains to be checked in the future.
Huang and Chou agreed that the global technology market is increasingly segmented into three blocs: the US, China, and the rest of the world. While AI accelerators and cloud infrastructure are driving Taiwan’s resurgence in manufacturing, China is positioned to capture growth in consumer-focused edge AI.
Semiconductor Supply Chain 2025+ Webinar
The developments outlined above will be examined in greater depth during the upcoming Semiconductor Supply Chain 2025+ Seminar, hosted by DIGITIMES. Senior executive & analyst will provide further perspectives on how artificial intelligence, geopolitical realignments, and manufacturing shifts are reshaping the global supply chains.
Date: September 26 at 08:00 (GMT+8) / September 25 at 20:00 (ET) / 17:00 (PT)
For further information and registration, please visit: Semiconductor Supply Chain 2025+
