Chips, China, and the AI Reckoning: Reflections on 25+ Years in Semiconductors (Part 2)

The semiconductor industry's transformation is entering a new phase, marked by extraordinary opportunities in AI and new computing architectures, but also by formidable competitive and operational challenges. I believe senior executives charting strategy in this environment need to focus on a few key priorities:

Riding a technology wave isn’t enough. You must position yourself at the center of it. For semiconductor companies, that means putting AI at the heart of your strategy, not just as a buzzword but through real investment in R&D and go-to-market execution. This includes building chips optimized for AI workloads and backing them with the software, developer tools, and reference platforms that make those chips essential to customers.

The most successful players know that differentiation doesn’t stop at the silicon. It comes from owning the platform. NVIDIA’s dominance in AI isn’t just about GPUs. It’s about CUDA, their developer stack that has become the foundation for AI development worldwide. Similarly, Qualcomm recently acquired Edge Impulse, a leader in embedded AI development platforms. This move underscores their shift toward enabling developers with full-stack solutions, particularly at the edge. AMD, too, has ramped up its ROCm software platform, positioning it as an open alternative to CUDA for HPC and AI workloads.

Put simply, an AI chip alone won’t win. Real differentiation comes from the surrounding platform. As one CEO recently told me, “Our customers aren’t buying processors, they’re buying an AI capability.” Delivering that capability end-to-end, from hardware to software, will define the next generation of industry leaders.

The expansion of Chinese semiconductor players presents both challenges and opportunities to the global market. Semiconductor companies are encouraged to continue to innovate and focus on next generation technologies to differentiate their offerings, while adapting their strategies in established segments. Strategic pricing and operational excellence will be key as competition intensifies.

Many companies may find value in exploring collaborations or joint ventures in China to tap into local growth opportunities while navigating competitive challenges. Keeping a close eye on market developments and enhancing customer value through tailored services will support sustained success. This shift reflects a significant, ongoing market evolution that calls for thoughtful and forward-looking strategies.

Recent disruptions made one thing clear: you can’t afford to treat supply chain resilience as optional. Map out your supply chain for critical materials and identify single points of failure. Diversify geographically to guard against regional risks. Increase collaboration with suppliers deep in your supply chain to gain early warning of issues. Additionally, consider holding strategic inventory or investing in buffer capacity for components with limited sources. While these actions can carry cost, the cost of a production line down due to a supplier issue is far greater.

Supply chain resilience is now a competitive differentiator. Your customers (especially in automotive and industrial sectors) will gravitate to partners who can assure continuity. Make it a selling point that your company has contingencies and robustness in supply built in.

Finally, steer your business with the understanding that different application markets are faring very differently. Allocate resources to the growth engines (AI, automotive electrification, etc.) while maintaining discipline in segments facing headwinds.

For instance, be ready to pivot more capacity or sales effort towards data center or auto customers if consumer demand stays anemic. Likewise, use the current lulls to deepen engagements in those ecosystems (such as collaborating on future EV platforms or software defined vehicle initiatives) so that when the cycle rebounds, you are even more embedded with customers. Maintain a balanced portfolio so that strength in one market can offset weakness in another.