The AI Semiconductor Landscape
The semiconductor industry is top of mind in 2025. But how does it all fit together?
Happy Trump inauguration day! With the U.S. continuing a number of stringent exports controls and this next administration expected to keep it up maybe even with elevated tariffs it’s a super interesting time to think more about the semiconductor industry. The AI arms race and national security due diligence related to U.S. exceptionalism is upon us.
A flurry of Executive Orders by the Biden Administration on his last two weeks in office were telling. Trump and the new administration will be carefully watched and their actions scrutinized. Meanwhile, I’ve long admired the work of
for his macro overviews on various aspects of technology stacks. Let’s feature some of them here:⚗️ Generative Value 🌍
His Newsletter, Generative Value provides great insights into how everything is connected.
A Deep Dive on Inference Semiconductors
A Primer on Data Centers
A Primer on AI Datacenters
Nvidia: Past, Present and Future
Whether you are an investor, technologist or just a casual reader his overviews will provide you some value and are easy to understand and scan.
As you know, the Biden administration has implemented a series of executive orders (EOs) and export controls (ECs) aimed at regulating the semiconductor industry, particularly in response to national security concerns and competition with China. Trump has said various things with regards to tariffs on China as well. The U.S. appears to be trying to control how AI spreads to other nations, limiting China’s ability to for example access the best Nvidia AI related GPUs and chips.
Jake Sullivan — with three days left as White House national security adviser, with wide access to the world's secrets — called on journalists and news media to deliver a chilling, "catastrophic" warning for America and the incoming administration:
The AI Arms Race circa 2025
What happens this point on is fundamentally a new world of innovation and competition in innovation.
“The next few years will determine whether artificial intelligence leads to catastrophe — and whether China or America prevails in the AI arms race.”
According to JS, as reported by Axios, “AI development sits outside of government and security clearances, and in the hands of private companies with the power of nation-states.”
“U.S. failure to get this right, Sullivan warns, could be "dramatic, and dramatically negative — to include the democratization of extremely powerful and lethal weapons; massive disruption and dislocation of jobs; an avalanche of misinformation." It wasn’t clear in his briefing if OpenAI, Anthropic, Google and others can be expected to “get this right”. The U.S. believes it is the AI leader heading into the new year and new administration.
Clearly in 2025, corporations and the financial elite who have the most say (majority shareholders), have enormous power in the AI arms race that’s ahead in the 2025 to 2035 period, an incredible decade of datacenters, semiconductors and a sprawling new landscape related to AI ahead. The 2025-2035 argutely is the most important decade in the history of innovation human civilization has ever witnessed.
Geopolitics aside, the semiconductor industry is becoming way more important with datacenters and a new emergence of AI’s capabilities. I will be covering the semiconductor industry more closely in 2025 in this and related publications.
But how does it all work? What are the companies involved? Why are companies like Nvidia, TSMC, ASML and others so pivotal? What about the big picture and landscape?
The AI Semiconductor Landscape
By
, December, 2024.Hi, my name’s Eric Flaningam, I’m the author of Generative Value, a technology-focused investment newsletter. My investment philosophy is centered around value. I believe that businesses are valued based on the value they provide to customers, the difference between that value & the value of competitors, and the ability to defend that value over time. I also believe that technology has created some of the best businesses in history and that finding those businesses will lead to strong returns over time. Generative Value is the pursuit of those businesses.
1. Introduction
Nvidia’s rise in the last 2 years will go down as one of the great case studies in technology.
Jensen envisioned accelerated computing back in 2006. As he described at a commencement speech in 2023, ”In 2007, we announced [released] CUDA GPU accelerated computing. Our aspiration was for CUDA to become a programming model that boosts applications from scientific computing and physics simulations, to image processing. Creating a new computing model is incredibly hard and rarely done in history. The CPU computing model has been the standard for 60 years, since the IBM System 360.”
For the next 15 years, Nvidia executed on that vision.
With CUDA, they created an ecosystem of developers using GPUs for machine learning. With Mellanox, they became a (the?) leader in data center networking. They then integrated all of their hardware into servers to offer vertically integrated compute-in-a-box.
When the AI craze started, Nvidia was the best-positioned company in the world to take advantage of it: a monopoly on the picks and shovels of the AI gold rush.
That led to the rise of Nvidia as one of the most successful companies ever to exist.
With that rise came competition, including from its biggest customers. Tens of billions of dollars have flowed into the ecosystem to take a share of Nvidia’s dominance.
This article will be a deep dive into that ecosystem today and what it may look like moving forward. A glimpse at how we map out the ecosystem before we dive deeper:
To read the entire piece, consider supporting the Newsletter for less than $2 a week.
💡 Generative Value Newsletter ✏️
Keep reading with a 7-day free trial
Subscribe to AI Supremacy to keep reading this post and get 7 days of free access to the full post archives.
 | A guest post by
|