AI and Geopolitics Reshape Global Tech Supply Chains, DIGITIMES Analysts Say

Semiconductors and electronics are at the center of a sweeping global supply chain transformation, driven by the artificial intelligence boom, shifting market power, and geopolitical realignments, according to new analysis from DIGITIMES.

Eric Huang, vice president at DIGITIMES, said that the rise of generative AI has reshaped industry leadership. In 2018, only five of the world’s top 10 companies by market value were tech firms. By mid-2025, nine of the top 10 fell into that category, including chipmakers Nvidia, Broadcom, and TSMC, alongside platform giants such as Apple, Microsoft, Amazon, Alphabet, Meta, and Tesla.

Taiwan and China in Flux

Huang noted dramatic shifts in contract manufacturing. Taiwanese firms once held 78% of top ODM and EMS revenues in 2018, while China controlled just 6.4%. By 2024, China’s share jumped to 22%, fueled by consumer electronics. However, surging demand for AI servers in early 2025 boosted Taiwan’s share back up to 70%, with Nvidia orders playing a key role.

In semiconductors, Nvidia reported $72 billion in 2024 chip sales, capturing a 12% global market share. TSMC maintained its lead in foundry services with a 55% market share. Chinese players like SMIC and Huahong continue to expand, though they lag behind in advanced logic production.

Three Battlefields Defining the Future

Huang identified three “battlefields” driving the new tech order:

Supply Chain Relocation – Under U.S.-China rivalry, companies are diversifying with “China+1” strategies, expanding production in Vietnam, India, and Mexico.

Cloud and AI Infrastructure – Nvidia GPUs now dominate AI workloads, surpassing Intel and AMD. DIGITIMES projects AI servers will represent 12% of global shipments in 2025, with high-end systems growing 44% annually.

Edge AI – Growth is spreading into PCs, smartphones, appliances, and industrial devices. Chinese firms are expected to lead consumer applications, while Taiwanese companies specialize in enterprise security and networking.

U.S. Manufacturing Ramps Up but Asia Holds the Core

DIGITIMES analyst Yen Chou added that U.S. server assembly capacity is rising, with Foxconn, Quanta, Wistron, Inventec, and Mitac building facilities across Texas, California, and Tennessee. Still, these plants rely heavily on components from Asia.

Most AI servers powered by Nvidia’s H200 GPUs continue to undergo key assembly stages in Taiwan. Advanced packaging at TSMC’s Arizona fabs and Amkor’s facilities is not expected before 2027, meaning U.S. operations will remain dependent on Taiwan for final processing.

Chinese suppliers also remain embedded in U.S. supply chains, providing PCBs, casings, and components. Meanwhile, imports from Vietnam and Malaysia have risen since mid-2025 following new U.S. tariffs on steel and aluminum, though it remains unclear if this will be a lasting trend.

A Fragmented Tech World

Huang and Chou concluded that the global tech ecosystem is now split into three blocs: the U.S., China, and the rest of the world. Taiwan is regaining strength through AI-driven demand, while China is positioned to dominate consumer-focused edge AI.

DIGITIMES will explore these trends further during its upcoming Semiconductor Supply Chain 2025+ Seminar, where industry leaders and analysts will examine how AI, geopolitics, and manufacturing shifts are reshaping global technology supply chains.