Building AWS for Hardware: How Claude Powers Circuit Board Design
Summary of the video “The Founder Using Claude to Build Real Hardware” by The Generalist.
Davide Nastagi, CEO of Diode, is bringing circuit board manufacturing back to the US by combining AI-driven design with on-site production. He explains why the West outsourced this critical layer to Asia, how large language models can automate 90% of schematic design, and why democratizing hardware is the next frontier for American innovation.
The Problem: Why Circuit Boards Became the Forgotten Middle Child
The Three-Tier Outsourcing of Electronics
Around 2000, Western countries outsourced printed circuit board manufacturing to Asia, viewing it as non-critical compared to silicon design. Unlike software (forgiving, fast to iterate) or silicon (catastrophically expensive to get wrong), PCBs occupied a middle zone—costly enough to matter ($10k–$80k per mistake) but not catastrophic enough to warrant serious tooling investment in the US.
Why China Dominates Manufacturing Today
China's advantage is not cheap labor—it's world-class automation and a cultural obsession with manufacturability. Modern Chinese factories are highly automated; engineers design boards thinking about assembly constraints (e.g., single-sided layouts to avoid double reflow). This mindset and infrastructure has not been replicated in the US.
Apple's Hidden Bottleneck
Even Apple, the world's best hardware company, has prototyping cycles far slower than Shenzhen's. While Apple solved production at scale, iteration speed for new designs remains constrained—a systemic problem, not a resource problem.
The Founder's Journey: From Italy to Shenzhen to Brooklyn
Early Exposure to Making: Arduino and Italian Manufacturing Culture
Growing up near Milan, Davide was surrounded by small electronics manufacturers and discovered Arduino at an electronic fair. This hands-on, maker-oriented culture shaped his belief that building tangible things was possible and valuable.
Minnesota Epiphany: Entrepreneurship as a Viable Path
Sent to Winona, Minnesota for high school, Davide discovered that Fortune 500 companies (Fastenal, 3M) and strong entrepreneurial culture could emerge from small towns. This shattered his assumption that innovation was confined to coastal cities and showed him that building meaningful things with community impact was achievable.
Hong Kong as Compression of Learning
Living in Hong Kong exposed Davide to elite electrical engineers (like Alex Wong, building prosthetic robotic hands at 19) and a culture that prizes hard sciences over pure software. This humbling experience showed him that mastery in electronics was attainable and that Shenzhen's manufacturing ecosystem was built on deep technical knowledge, not just labor arbitrage.
Why Italy Produces Fewer Founders Than Expected
Italian capital markets and pension structures are less conducive to venture risk-taking than Anglo-Saxon countries. Combined with high quality of life, the incentive to sacrifice 10 years for a 1% chance of success is misaligned. This is not a flaw—it reflects different cultural values—but it explains why ambitious founders often leave.
The Diode Insight: Solving the PCB Design Bottleneck with AI
The YC Pivot: From Design Tool to Full-Stack Manufacturing
Diode initially pitched a design-validation tool using LLMs to catch mistakes before manufacturing. But customers didn't have an express pain point around marginal improvements—they had an acute problem: they couldn't hire electrical engineers and needed boards fast. This led to a 3-week YC pivot: instead of selling vitamins, build the full solution (design + manufacture).
Incentive Alignment as a Competitive Moat
Unlike traditional design-only firms, Diode manufactures the boards it designs. This creates accountability: if a board fails in production, Diode bears the cost. This misalignment of incentives forces the company to co-optimize design and manufacturing, making boards far more manufacturable than industry standard.
The Specification-to-Board Pipeline
Customers provide a specification document (via call or AI-assisted spec builder). Multiple LLM agents generate first-pass designs. Diode engineers review and refine. Customers visualize and confirm via a code-based platform (not black-box AI output). The design is then manufactured in-house and shipped. This end-to-end ownership ensures quality.
AI Automation: Current Capabilities and Roadmap
Schematics: 90% Automated, Human-Polished
LLMs can now generate 90% of a schematic in one shot. Schematics are logical graphs (similar to code), making them ideal for AI. Diode still has humans clean up visual presentation because customers need readable, trustworthy output for archival and integration into their EDA tools (Altium, KiCad, Cadence).
Layout: 40–50% Automated, Still Improving
Layout (component placement and routing) is harder than schematics. LLMs are good at placement but struggle with routing (trace optimization). Diode is investing heavily in research; companies like Quilter focus solely on routing. The bet is that LLMs will improve dramatically in the next few years.
Library Management: Now Fully Automated
Historically, large companies employed a dedicated librarian to manage symbols, footprints, and datasheets. LLMs now handle this entirely on-demand, compressing timelines by hours. This was impossible 6 months ago; now it's table stakes.
RF and High-Complexity Boards: Still Human-Intensive
RF (radio frequency) boards are layout-heavy and require deep domain expertise. Diode still uses human engineers for Fortune 100 aerospace customers, but even here, timelines compress from 9 months to 1 month (including factory delivery).
The Vision: AWS for Hardware
Democratizing Hardware Like AWS Democratized Cloud
AWS removed the need for every company to own and manage servers. Diode aims to do the same for circuit boards: a one-stop shop where customers specify a board, AI designs it, and Diode manufactures and ships it. Ownership of the infrastructure (factory, machines, expertise) stays with Diode; customers own the design and product.
The Hardware Renaissance Thesis
If software engineers can build electronics as easily as they spin up a SaaS server, a flood of new hardware products will emerge. The US has world-class software talent but finds hardware unapproachable. Removing that friction unlocks innovation.
Diode's Ambition: The American Foxconn for the AI Era
Foxconn is a Taiwanese giant that manufactures at massive scale. Diode's long-term vision is to build an American equivalent, but optimized for the AI era: fast iteration, small batches, AI-driven design, and US-based manufacturing. This requires not just factories but a cultural shift toward manufacturability-first design.
Why This Matters Geopolitically
Reindustrialization is not just economic—it's strategic. Understanding why China succeeded (government support, cultural emphasis on hard sciences, automation investment) and why Europe stumbled (services-focused, weak SMB manufacturing support) is essential to building a resilient US industrial base.
Building Diode: Culture, Hiring, and the CEO's Role
Obsessive Talent Selection Over Growth-at-All-Costs
Davide prioritizes hiring high-bar engineers over rapid scaling. Despite massive demand, Diode hires deliberately, focusing on where pain exists (currently layout automation). This reflects a belief that company culture—working with people you respect and enjoy—is the primary differentiator.
CEO as Hands-On Maker: One Board Per Week
Davide builds at least one circuit board per week, positioning himself as the least productive engineer at the company. This keeps him grounded in the actual problem and generates ideas. He also builds hardware to automate the factory itself (conveyor belt controls, data models, machine interfaces).
The Lenny Dynamic: Idea Generation vs. Discrimination
Co-founder Lenny is exceptional at filtering Davide's prolific ideas. Davide generates many concepts; Lenny identifies which 3–5 are worth pursuing. This complementary dynamic (Davide: breadth, Lenny: depth) has been crucial to avoiding distraction and maintaining focus.
Hiring Call: Electrical Engineers and Hardware-Curious Software Engineers
Diode is hiring aggressively for talented electrical engineers and software engineers interested in hardware. The pitch: come to Brooklyn, work in a factory overlooking Manhattan, solve a critical bottleneck, and build the future of US manufacturing.
Strategic Insights: Shenzhen vs. Silicon Valley, and the Path Forward
Shenzhen's Competitive Advantage: Divide and Conquer Manufacturing
Silicon Valley's strength is social networks and talent density. Shenzhen's is a vertically integrated ecosystem where complex manufacturing is divided into specialized steps, each owned by expert manufacturers who hand off to the next. Knowledge percolates through layers; each player becomes world-class at their slice.
The Copper Merchant Philosophy
Davide describes himself as a copper merchant: the merchant part (selling, delivering value) is as important as the engineering part. Success is measured not by elegant design but by beautiful copper in customers' hands and those boards making it into products.
Replicating Shenzhen in the US: Not Impossible, Just Different
The US cannot simply copy Shenzhen's labor-cost model. Instead, Diode's bet is to co-design boards with manufacturing constraints in mind and let AI iterate until designs are maximally manufacturable. This shifts the problem from labor to automation and intelligence.
The Dogpatch Vision: Industrial City in San Francisco
Davide dreams of transforming Dogpatch (San Francisco's industrial district) into a manufacturing hub like Brooklyn Navy Yard—a place where hardware companies cluster, share knowledge, and accelerate innovation. This would bring Silicon Valley closer to Shenzhen's ecosystem density.
Recommended Reading and Geopolitical Context
Chip Wars: Understanding Geopolitics of Semiconductors
Davide recommends Chip Wars as essential reading to understand how US government policy shaped silicon development, why RAM production moved to Singapore and Vietnam, and how power balances shifted over 60 years. Without this context, reindustrialization devolves into us-vs-them thinking.
Breakneck: Engineering Culture and the Rise of China
Breakneck (by Bunnie Huang) explores how China built an engineering nation and culture. Davide emphasizes learning to admire the good parts (automation, hard-science emphasis) without demonizing the country, enabling nuanced policy thinking.
Notable quotes
If you can bring the speed at which software companies move to the hardware world, we'll see a hardware renaissance. — Davide Nastagi
I will not trust somebody that tells me, 'Oh, China can do it because the labor is cheap.' That's not true anymore. They are incredible at automating things. — Davide Nastagi
We need AWS for electronics. We want to be that for the printed circuit board industry in the United States. — Davide Nastagi