The AI Semiconductor Arms Race — Strategy Framework

Format: PowerPoint Presentation (PPTX)  |  95 Slides  |  10 Sections + Appendix  |  Coverage: 18 Global Markets  |  Horizon: 2025–2030

Control of AI compute is now a geopolitical and commercial weapon—and the window to position is closing. This McKinsey-style strategic research framework synthesizes publicly available institutional research from McKinsey Global Institute, Goldman Sachs, IEA, Gartner, IDC, Morgan Stanley, BIS official rulemaking records, TSMC and NVIDIA earnings disclosures to deliver a capital-allocation-grade view of the AI semiconductor value chain across 18 global markets.

NVIDIA controls over 80% of AI accelerator hardware. Hyperscalers are spending $443 billion in 2025 alone with 75% directed at AI-grade infrastructure. Supply chain chokepoints at TSMC CoWoS packaging, HBM3e memory, and 2–3nm foundry nodes are fully allocated through 2026. Sovereign nations from the UAE to India are committing $200 billion to break dependency on commercial US suppliers. US export controls are bifurcating the global semiconductor market into irreconcilable stacks.

Document Contents — 95 Slides Across 10 Sections

• Section I — GPU Oligopoly (Slides 10–20): NVIDIA’s 80%+ dominance, CUDA moat and 4M-developer lock-in, AMD MI300X competitive assessment, Intel Gaudi 3 price-performance analysis, hyperscaler custom ASICs (Google TPU v7, AWS Trainium2, Microsoft Maia, Meta MTIA), and the compute-vs-memory bandwidth gap driving the HBM arms race.
• Section II — Supply Chain Chokepoints (Slides 21–30): TSMC CoWoS packaging bottleneck (13K → 70K wafers/month but demand grows 113% YoY), HBM3e shortage (SK Hynix booked through 2026), TSMC N2 economics, and transformer/substation hidden bottlenecks.
• Section III — Capital Flows (Slides 31–41): Stargate $500B initiative, hyperscaler CapEx velocity ($443B in 2025), sovereign wealth fund AI allocations (MGX $100B, PIF $100B, Temasek $15–25B, GIC, GPIF), PE and REIT flood into AI data centers (Blackstone, DigitalBridge, Brookfield, KKR, Digital Realty), and NVIDIA’s $3T market cap platform economics.
• Section IV — Sovereign Chips & Geopolitics (Slides 42–52): Three rounds of US BIS export controls closing every NVIDIA workaround, China’s parallel AI stack (Huawei Ascend 200K units shipped 2024, SMIC 7nm, CXMT HBM3 target 2026), Chip 4 Alliance tensions (US, Japan, South Korea, Taiwan — 82% of global production), EU €80B Chips Act realistic assessment, Japan’s Rapidus 2nm bet ($10T over 7 years), India’s $20B AI investment wave, and Taiwan Strait risk scenarios.
• Section V — The Inference Revolution (Slides 53–59): Training-to-inference inversion (inference now 60% of AI compute, up from 30% in 2022), OpenAI’s $2.3B inference spend vs $150M training (2024), $106B inference hardware market in 2025, Google TPU v7 Ironwood 4× cost advantage over H100, edge AI proliferation (1B on-device AI by 2027), and vertical integration TCO analysis (40–65% advantage for hyperscalers).
• Section VI — Power Infrastructure (Slides 60–66): Data center power doubling to 945 TWh by 2030, US grid interconnection queue exceeding 2,600 GW, 10 GW corporate nuclear commitment (Microsoft, Google, Amazon, Meta), liquid cooling mandatory at 80–120 kW rack density (PUE 1.2 vs 1.4–1.6 air-cooled), and power as the #1 site selection criterion.
• Section VII — Regional Dynamics (Slides 67–73): US capacity race ($443B CapEx, gridlocked primary markets), Middle East $200B sovereign AI deployment (UAE Stargate MGX, Saudi HUMAIN Project Transcendence), EU regulatory premium (15–25% yield premium for GDPR-compliant infrastructure), Japan & Korea semiconductor strategy (Rapidus 2nm, SK Hynix HBM4 leadership), India’s $20B 2025 wave, and China’s parallel AI universe.
• Section VIII — Market Projections & Scenarios (Slides 74–78): AI chip market $67B (2023) → $350B (2028) at 39% CAGR, NVIDIA share declining from 95% to 75% while revenue grows 4×, three institutional forecast comparisons (Grand View, Allied, Telcotank base case), base/bull/bear scenario framework, and 2026 as the revenue validation year.
• Section IX — Strategic Implications (Slides 79–86): Five non-negotiable imperatives for 2025–2027, compute moat framework, build-vs-buy-vs-partner decision matrix (custom silicon threshold: $500M+ annual AI hardware spend), 90-day action plan (supply chain audit, inference roadmap, geopolitical exposure assessment), and what happens if you wait 12 months.
• Section X — Risk Vectors (Slides 87–90): Taiwan Strait scenarios (Base 85%, Moderate Blockade 10%, Severe Conflict 5%), AI efficiency disruption risk (DeepSeek-scale), CapEx correction trigger conditions, and geopolitical bifurcation hedge strategies.
• Appendix (Slides 91–95): AI chip market data tables, GPU generation comparison (H100 → H200 → B200 → GB200 NVL72 specs and ASPs), AI accelerator market share trend 2022–2028, glossary of key terms, and full source references.

Five Core Strategic Findings

• NVIDIA’s CUDA moat is eroding slowly — not collapsing. 4 million developers and 20 years of ecosystem lock-in will not dissolve by 2027. NVIDIA retains pricing power through at least 2028.
• HBM3e and CoWoS are fully allocated through 2026 — this is the binding constraint. Supply chain position, not willingness to pay, determines AI infrastructure access.
• Inference is now the dominant workload and NVIDIA doesn’t own it the way it owns training. Inference market share: NVIDIA 65%, custom ASICs 20–25%, CPUs 10–15% by 2026.
• US export controls have permanently bifurcated the AI hardware market. Two incompatible AI stacks are forming — this is structural decoupling, not trade friction.
• The sovereign AI wave creates $200B in demand immune to commercial cycles. UAE $100B, Saudi Arabia $100B, India $20B, EU $80B Chips Act, Japan $10T over 7 years.

Best For

Capital allocators evaluating semiconductor-linked positions, corporate strategy teams managing AI infrastructure vendor risk, policy and sovereign planners navigating the Chip 4 Alliance and national compute strategy, and any institution with cross-border AI infrastructure exposure that must model bifurcation by 2027.

Delivered as a PowerPoint (.pptx) file — 95 slides. McKinsey Pyramid Principle formatting: each slide leads with the conclusion, supported by 3–5 institutional data points. License: Single-entity use. Digital delivery upon purchase.