Global Chip Makers Compete as AI Drives Cloud Adoption
The global semiconductor industry is experiencing a surge in demand as businesses across the world accelerate their adoption of cloud computing and AI technologies.
This shift is driving intense competition among chip makers, with companies like Intel, AMD, Nvidia and ARM vying for dominance in the rapidly changing market.
Yet as organisations reassess their IT strategies to leverage these technologies for innovation and efficiency, the demand for specialised processors capable of handling complex AI workloads and cloud-based applications is reaching new levels.
A recent survey by Red Hat, a provider of open-source software solutions, sheds light on this trend.
The study, which encompassed 609 IT managers from large businesses across six countries, reveals that cloud technology investment is a priority for multiple IT managers, including 98% of the UK’s IT managers surveyed for the year 2025.
AI driving cloud strategy and chip demand
Red Hat says preparing for AI adoption is a priority for 88% of UK respondents, nearly on par with cloud-native application development and DevOps (89%) and evolving cloud strategy in line with business objectives (89%).
This focus on AI and cloud technologies is driving demand for specialised processors.
Nvidia, for example, known for its graphics processing units (GPUs), has seen its market value soar as its chips prove essential for AI workloads.
- 28% of UK respondents plan to focus strongly on innovation and new technologies
- 61% anticipate balanced growth between new technologies and enhancements to existing systems
- Of those planning increased investment, 53% intend to boost their spending by 21-50%
Meanwhile, Intel and AMD are ramping up their efforts in the AI chip market, with both companies developing new processors designed specifically for AI applications.
Red Hat says that ARM, which designs chip architectures licensed by various manufacturers, is also positioning itself as a key player in the AI chip market.
The company's energy-efficient designs are becoming increasingly attractive for cloud data centres looking to optimise performance while managing power consumption.
Addressing the skills gap and trust in AI
Red Hat also highlights an urgent skills gap in the area of AI, including data science, large language models (LLMs) and generative AI (Gen AI).
This gap is identified by 81% of UK respondents, up from 72% in 2023, making it the top-ranked skills gap.
This skills shortage is likely to impact the semiconductor industry as well, with chip makers competing to attract talent capable of designing and optimising processors for AI workloads.
When determining trust in an enterprise model for Gen AI, 95% of UK IT managers surveyed consider having transparent, modifiable models with explainable sources the most important factor.
This emphasis on transparency could influence chip makers' strategies, potentially leading to increased focus on open architectures and collaboration with software providers.
Challenges in cloud adoption and implications for chip makers
Red Hat found that 96% of IT managers across the six countries say siloed teams pose challenges when adopting cloud technologies, with 53% encountering this issue frequently.
These challenges in cloud adoption could present opportunities for chip makers to develop more integrated solutions that address issues such as inconsistent security and compliance across different providers, increased costs and limited control and visibility over cloud resources.
Hans Roth, Senior Vice President & General Manager EMEA at Red Hat, says: "Cloud technology continues to unlock significant advantages in scalability, cost efficiency and faster time to market.
“Yet, this adoption can also drive increased complexity, with many organisations finding themselves slowed down by internal silos, as shown in this latest survey."
As the competition among chip makers intensifies, the ability to address these complexities through hardware innovations could become a key differentiator in the market.
Joanna Hodgson, Country Manager for the UK at Red Hat, concludes: "We see a strong desire from UK businesses to innovate with cloud technologies to stay competitive, while needing to respond to cost pressures and find efficiencies.
“AI has the potential to help address a range of business demands, and we believe an AI-centric future requires greater choice, flexibility and independence across clouds."
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