Cinco de Moore’s Law: Five Reasons Semiconductors are Hotter than Ever
Chips and Salsa: AI, Edge, Packaging, ... for Next-Gen Computing and Global Growth
On this Cinco de Mayo, as we celebrate resilience, innovation, and identity, it's fitting to look at an industry that embodies all three: semiconductors. From fueling the AI boom to underpinning digital infrastructure and global economic policy, semiconductors have quietly become the most strategic asset in the modern world.
Once thought of as just components in electronic devices, semiconductors now determine the pace of global innovation, the shape of international trade, and the capacity of nations to compete economically. In this moment of inflection, understanding the drivers behind the semiconductor sector is no longer optional — it's foundational to understanding where the world is headed.
1. AI’s Insatiable Appetite for Semiconductors
Artificial intelligence is not a trend. It’s an economic force multiplier — and semiconductors are its fuel.
Recent earnings calls from Nvidia, AMD, and Broadcom all point to the same conclusion: we are entering a multiyear investment cycle driven by AI model training, inferencing, and edge deployment. Nvidia Q4 FY2024 revenue surged 265% year-over-year, led by record data center demand. Broadcom, on its Q1 FY2025 call, projected over $4.4 billion in AI revenue for Q2 alone.
These aren't spikes. They're structural shifts — the first inning of a long AI infrastructure buildout. Every AI model, from Gemini to Claude to Copilot, requires exponentially more compute, bandwidth, and energy optimization — all of which drive demand for semiconductors at every level of the stack.
2. Edge Computing: Decentralizing Data Processing
As AI and data workloads grow, the need to process information at the edge — closer to where data is generated — becomes critical.
Edge computing minimizes latency, increases data sovereignty, and reduces cloud bandwidth costs. But it also requires specialized chips: low-power, high-efficiency semiconductors capable of real-time processing in diverse environments.
From smart factories to autonomous logistics to remote sensing, edge use cases are exploding. And this creates not just demand for more chips — but for entirely new design paradigms, packaging techniques, and supply chain strategies.
3. Advanced Packaging: The Silent Revolution
One of the most important but least understood shifts in semiconductor engineering is the move toward advanced packaging. 3D chip stacking, heterogeneous integration, and chiplets are no longer experimental — they are essential.
Instead of scaling by shrinking transistor size alone, chipmakers are turning to architectural innovations that allow different chip functions (compute, memory, I/O) to be optimized separately and integrated into one package.
This matters because AI, edge, and data center workloads are power- and bandwidth-hungry. Advanced packaging improves energy efficiency, reduces signal loss, and accelerates time to market — a trifecta for hyperscale competitiveness.
4. Semiconductors Are Now Economic Infrastructure
It’s no longer accurate to think of chips as a tech sector product. They are economic infrastructure — as critical to 21st-century growth as oil was to the 20th.
Semiconductors underpin everything from productivity growth to digital trade, from national security to inflation resistance. According to the Semiconductor Industry Association (SIA), global chip sales topped $600 billion in 2024, with projections pushing toward $1 trillion before the decade ends (semiconductors.org).
The sector’s impact is visible in GDP figures, export data, R&D intensity, and capital investment flows. Taiwan, South Korea, US, China, Japan, and Europe are all treating semiconductors not just as products — but as strategic levers of economic competitiveness.
5. Strategic Investment and Policy Response
With global attention comes government action. The US CHIPS and Science Act, the EU Chips Act, Japan’s $13 billion subsidy package for advanced fabs, and India’s push for domestic design — all point to the same reality: semiconductors are no longer left to market forces alone.
These initiatives are not purely defensive. They’re proactive strategies to secure high-value jobs, intellectual property, and future GDP contributions.
From an investor lens, this means the sector is being de-risked through public-private partnership. From an executive lens, it means geographic diversification, supply chain resilience, and incentive-aligned capex are now board-level imperatives.
6. Looking Forward: A New Global Order Shaped by Semiconductors
Over the next 5 to 10 years, semiconductors will define the competitive dynamics of the global economy.
They will determine:
Who leads in AI and automation
Who controls energy-efficient infrastructure
Who drives innovation in climate tech, biotech, defense, and digital services
And ultimately, who sets the terms of the digital economy
Already, countries are recalibrating trade relationships around semiconductor access. Tech alliances — like the US-Japan-Netherlands coordination on lithography exports — are increasingly semiconductor-driven. Meanwhile, industry alliances such as the Open Compute Project and UCIe consortium are reshaping the value chain from monoliths to modular collaboration.
For institutional investors, this signals a multi-decade runway of infrastructure-grade opportunity — similar in nature to the early days of the railroads, power grids, or telecom buildout. For executives in EDA and semiconductor companies, it raises the bar for agility, ecosystem thinking, and geopolitical awareness.
Five Key Takeaways: Why Semiconductors Are the New Strategic Asset
AI is the catalyst — but the tailwinds are broad.
The sector isn’t just riding the AI wave; it’s enabling it. And it will also power edge computing, smart industry, and next-gen cloud.We’ve entered a long-cycle capex and policy era.
Government support, fab subsidies, and national strategies are extending the investment runway.Advanced packaging is where innovation is accelerating.
It’s no longer just about nodes. Chiplets, 3D stacking, and co-packaged optics will define performance and margin differentiation.Semiconductors are geopolitical infrastructure.
From defense to economic growth, chips now influence policy decisions and international relations.The winners will think ecosystem-first.
Collaboration across foundries, EDA, IP, design houses, and hyperscalers will separate the leaders from the laggards.
Bottomline
Cinco de Mayo commemorates a victory of courage against the odds — a fitting parallel to the semiconductor industry’s journey from a niche domain to a central pillar of the global economy.
This isn’t just about transistors. It’s about transformation. The companies that understand this — and the investors who back them — will help shape not only the next computing era, but the next chapter of economic history.
Today, the world runs on chips (and salsa). Y el calor — the heat — is just getting started.