Global tech supply chains are being reshaped by three key'battlefields', says DIGITIMES analysts

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.

DIGITIMES vice presidentEric Huanghighlighted 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 toTaiwanandChina'schanging 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, whileChina'sshare stood at 6.4%. By 2024,Taiwan'sshare fell to 65% as Chinese suppliers expanded to 22%, fueled by consumer electronics orders. In early 2025, however,Taiwan'sshare 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 reachedUS$72 billionin 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 toVietnam,India, andMexico.

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, reachingUS$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.

Global server EMS shifts toward the US, butAsiaremains the backbone of AI server supply chains

DIGITIMES analystYen Chouadded that global server EMS production is rapidly changing, but reliance onAsiaremains. Taiwanese firms, including Foxconn, Quanta, Wistron, Inventec, and Mitac, have expanded facilities inTexas,California, andTennessee. These US plants, however, still depend heavily on components fromAsia, likeTaiwan,China,Malaysia, andVietnam.

Chou said most AI servers using Nvidia's H200 GPUs undergo critical assembly processes inTaiwan, though US capacity is rising. Even with TSMC'sArizonafabs and Amkor's fabs, advanced packaging will not be available before 2027, requiring GPUs to be shipped back toTaiwanfor final processing. This creates a continued US trade deficit withTaiwanin 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, sinceJune 2025, there has been a noticeable increase in the export of mechanical components fromVietnamandMalaysiato 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 drivingTaiwan'sresurgence in manufacturing,Chinais 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 26at 08:00 (GMT+8) /September 25at 20:00 (ET) / 17:00 (PT)

For further information and registration, please visit:Semiconductor Supply Chain 2025+

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