How To Enter Emerging Semiconductor Hubs Strategically

Forbes

4 days ago

Mkhitar Hayrapetyan, Minister of High-Tech Industry of the Republic of Armenia.
The semiconductor industry has become a paradox of innovation and vulnerability. Ninety percent of the world's most advanced chips are fabricated in a single East Asian corridor. That extreme concentration turns every typhoon, shipping backlog or political flare-up into a global tech crisis.
Governments and companies alike are now in a race to diversify. From Vietnam to Greece, a new generation of 'emerging hubs' is attracting interest. But while press releases come fast, progress often doesn't. Many initiatives stall once the reality behind headline numbers comes into focus.
To move beyond announcements and toward successful execution, tech leaders need a new framework, one that accounts not just for costs and incentives but for the structural, human and geopolitical dynamics that shape long-term viability.
Here is a strategic framework I have developed while advising companies on global expansion, including recent work in Armenia, where NVIDIA and Firebird recently announced a $500 million AI supercomputing infrastructure.
1. Infrastructure Today Vs. Development Tomorrow
One of the most common mistakes in evaluating new markets is focusing solely on what's already built. That can be misleading. What matters more is a country's ability to scale the right infrastructure within your investment timeline.
For example, I like to explain that while Armenia may lack legacy foundries, it boasts reliable nuclear power, strategic mineral access and a deep engineering tradition. These are not short-term fixes. But if your timeline allows, such long-range assets often matter more than current real estate.
Ask: Is the location merely cheap, or does it have the right foundation to build a modern, sustainable tech ecosystem?
2. Talent Pipelines Beyond The Obvious
Too many feasibility studies stop at headcount. A better question is: How deep is the bench?
Look at historical STEM investments. Scrutinize diaspora talent that could be repatriated. Assess the strength of local universities and their collaboration with industry. Understand cultural attitudes toward engineering careers—not just whether people are available, but whether they are inspired to build.
AI and semiconductor industries demand continuous talent renewal. A one-time training bootcamp won't cut it.
3. Specialized Due Diligence For Emerging Ecosystems
Conventional due diligence processes are designed for mature markets. They often fail in emerging ones. You need a different lens, one that accounts for volatility and still reveals genuine upside:
In both AI data centers and chip fabs, electricity can make up around 20% of total costs. But it's not just about price—it's about stability. Rolling blackouts or sudden rate hikes can destroy profitability. Investigate grid capacity, fuel diversification and forward-looking energy strategies.
Consider whether the country is plugged into global value chains. Are there free trade agreements? How efficient is customs? What protections exist for IP? Can capital flow in and out freely? The more these systems resemble developed economies, the less friction you'll encounter at scale.
4. How To Enter Without Overcommitting
The most resilient expansion strategies follow a phased approach.
Don't start with a megafab. Start with talent development. Sponsor university labs. Run a pilot assembly line. Test logistics. This builds internal knowledge while creating local goodwill.
Emerging markets may lack direct experience in semiconductors or AI—but often have untapped technical potential. Partner with institutions. Offer apprenticeships. Build mentorship networks. These programs create not just workers, but advocates.
In emerging hubs, the state is often an active economic partner. Understand how policy is shaped. Join local advisory councils. Help define standards. The deeper your relationship, the more influence you will have when policies shift.
Mitigating Risk Without Killing Momentum
Expansion in emerging markets will always carry risk. But the companies that prepare for it without being paralyzed by it are the ones that win. Here are some factors to keep in mind:
• Operational Resilience: Establish supplier redundancy. Create backup infrastructure. Develop cross-trained teams to respond to shocks.
Financial Hedging: Balance local revenues and costs to protect against currency swings. Maintain relationships with multiple banks. Monitor capital controls and taxation updates.
Exit Optionality: Design your investment for flexibility. Can equipment be moved or repurposed? Are your IP rights clearly delineated? Who can you sell to, partner with or hand off to if you exit?
Strategic Takeaways
The path to successful global expansion involves more than choosing the right location—it's about developing the right approach. Here are a few considerations:
Companies should begin by forming cross-functional teams that combine technical, geopolitical and financial expertise to evaluate target markets holistically.
Before making capital-intensive commitments, it's wise to initiate local partnerships. These early collaborations build credibility and uncover ground-level realities. At the same time, launching flexible pilot programs can generate vital insights and help organizations adapt quickly as they scale.
This isn't just about reducing costs or chasing incentives. It's about shaping the next phase of global tech infrastructure. Done right, expansion into new hubs isn't a hedge—it's a competitive moat.
The companies building genuine capabilities in emerging markets—investing in people, transferring technology, co-creating ecosystems—will gain advantages no one can replicate overnight.
The Bigger Picture
The semiconductor and AI industries are at an inflection point. Geographic concentration has gone from an efficiency advantage to a strategic liability. The shift toward emerging tech hubs isn't just a backup plan—it's the foundation for a more resilient, distributed innovation ecosystem.
But diversification alone isn't a strategy. Success will come to those who do more than follow the trend. It will come to companies that invest early, build local capabilities and turn uncertainty into a competitive advantage.
The future of global tech won't be written in a single region. It will be built across dozens of rising ecosystems, from Southeast Asia to Eastern Europe and beyond. The real question for executives isn't should we expand—but how will we lead?
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