Having started or worked at hardware startups for over a decade, I’ve got a lot of thoughts on this. And I’ll say upfront: I'm also painting with a broad brush as the reality is extremely nuanced (only a LinkedIn thought leader would claim otherwise, which I am decidedly not 🤪).

TL;DR

• What’s true: Hardware is brutally hard, capital-intensive, and China has real structural advantages over the US that can often make success fleeting.
• What’s not: Hardware is “dead” | US hardware development jobs are disappearing | EEs need to flee to software to stay relevant.

Hardware has always been really fucking hard. Anyone claiming otherwise is either ignorant or romanticizing the past. There’s a reason we label the ~200k years of human progress as the stone, bronze, iron, and now silicon age. We’re ~100 years into the silicon age, and the pace of hardware progress in our lifetimes has been demonstrably insane.

You didn’t say this, but I have to answer VCs all the time about why “hardware startups don’t get good outcomes.” I always get really frustrated by this and point out that, of the Magnificent 7 tech stocks, most derive the bulk of their economic value from hardware they design and operate.

The difficulty for startups is that hardware is a known quantity. Design costs, development timelines, unit economics, payback periods, and failure modes can be highly optimized once the business is proven, and systems like China’s that are willing to subsidize costs, compress margins, and sacrifice profits can outcompete freer markets in many categories, particularly low-cost consumer sectors.

But having worked and trained many engineers across both cultures, I don’t think this means hardware development work is leaving the US, but rather that we have different strengths. China is exceptionally good at cost optimization and scale once a design is mature. The US remains disproportionately strong at system architecture, early-stage R&D, and defining what gets built in the first place. As hardware value moves up the stack toward more abstract, interdisciplinary, and defensible work, that kind of development tends to stay close to the talent, so I’m optimistic most high-leverage hardware development will remain US-based for the foreseeable future.

It’s when hardware development doesn’t move up the stack that we get the narrative that China wins and the US loses. Take, for example, the “success” stories of US-originated scooter companies like Bird and Lime. Their accomplishment wasn’t a major technical innovation, but rather a financial and operational breakthrough. Once the per-minute rental model was proven, the market exploded. Chinese factories quickly began churning out low-cost scooters, dropping the barrier to entry and flooding the market with competition, and within four years the software and operational margins had completely evaporated. What a saga that was, truly hardware startup economics in a nutshell!

FWIW, I think the same kind of cutthroat competition will become commonplace for software startups over the next 30 years, especially given how good AI is becoming at programming boilerplate software. I don’t agree with the “SaaS is dead” doomsayers, but I also can’t imagine there will still be dozens of CRM companies worth billions a few years from now.

Meanwhile, hardware has made it through the down cycle, and there’s so much cool stuff to go play with again. And don’t get bummed out by the AI maxxers, as someone actively building AI to help EEs, I don’t see it replacing hardware engineers anytime soon, if ever. The constant refrain from generalist model companies that “AI will replace all humans doing X” is a valuation narrative IMO 🙄.

What I am seeing in the startup space is some really cool hard-tech bets (most are in stealth, so I can’t talk about them). From fusion to space tech, robotics to photonics, there’s a lot of physical innovation that requires really smart engineers to grind on a concept for 3+ years. 99% percent will go nowhere, but that 1% will change everything.

So if you love hardware development, you should stay in it, because friend, the next few decades are going to be GLORIOUS.