Sector Deep Dive: Artificial Intelligence - August 2025
- Team NorthStar
- Aug 21
- 2 min read
Artificial Intelligence (AI) is at the forefront of geopolitical competition, reshaping military power, economic security, and global governance. The AI sector's growth is underpinned by a race for technological dominance, with private companies showing increasing interest in data governance and innovation. Our August 2025 Sector Deep Dive report from NorthStar Insights explores the key trends and strategic dynamics for businesses and investors.
Key Market & Growth Trends
The global AI semiconductor market was valued at approximately $56.42 billion in 2024.
It is projected to reach around $232.85 billion by 2034, growing at a compound annual growth rate (CAGR) of 15.23%.
The Asia-Pacific (APAC) region has the greatest growth potential in the overall semiconductor market, with a projected CAGR of 8.34% from 2025 to 2030.
This growth is fuelled by strong government support, private sector research and development (R&D), and rising market demand from various industries.
NVIDIA currently holds over 90% of the global AI semiconductor market, but major tech companies like Microsoft, Google, and OpenAI are developing their own chips, which is expected to diversify the market landscape.
Geopolitical & Security Dynamics
The competition between the U.S. and China is a prominent factor in the AI sector. The U.S. favors an innovation-led governance approach, while China, through its Digital Silk Road initiative, aims to develop technological cooperation with the Global South.
These divergent approaches create regulatory uncertainty for businesses and pose operational and market access risks.
The integration of AI into military and surveillance systems is reshaping security strategies and increasing cyber vulnerabilities. For instance, India has over 140 smart surveillance systems along its border, while China is testing its DeepSeek large language models (LLMs) to enhance decision-making in autonomous vehicles and drones.
Private companies face increasing pressure to safeguard sensitive data as governments tighten national security controls.
Challenges & Opportunities
Supply Chain Vulnerabilities: Taiwan-based NVIDIA’s 90% market dominance and insufficient infrastructure in Southeast Asia and India create vulnerabilities in the supply chain. U.S.-China tensions and export restrictions could disrupt production and regional supply.
Talent Shortage: The industry faces a shortage of skilled labor in advanced semiconductor fields, which can act as a bottleneck to development.
Strategic Alliances: Emerging markets and strategic alliances, particularly between APAC and MENA, are opening the ecosystem for business investment and strengthening the resilience of the AI supply chain.
Cross-Regional Cooperation: International cooperation is increasing in response to cyber threats, presenting opportunities for framework development. The Malaysia-UAE cooperation on sovereign cloud infrastructure and platforms like the OIC-CERT are examples of this interregional collaboration.
The AI sector presents both transformative potential and significant geopolitical risks. Businesses should conduct thorough scenario planning and explore opportunities by monitoring developments across the APAC and MENA regions. To know more about how we can help, please reach out to ceo@northstar-insights.com