By Lina Irawan 
The global artificial intelligence landscape is increasingly shaped by two competing world orders: Washington’s Pax Silica and Beijing’s World Artificial Intelligence Cooperation Organization (WAICO). These two initiatives reflect sharply different visions of how power, technology, and access to critical AI infrastructure should be organized, creating a complex geopolitical chessboard where nations, particularly those in Southeast Asia, are forced to make strategic calculations. The stakes are immense, extending beyond technological supremacy to encompass economic security, national sovereignty, and the future of global governance in the digital age.
Pax Silica, launched by the United States in December 2025, ostensibly seeks to secure global supply chains for semiconductors, semiconductor manufacturing equipment, AI technologies, and rare earth minerals. Positioned by Washington as a cooperative organization rather than a mechanism to enforce its own policies, it aims to build a resilient technological ecosystem among like-minded nations. This initiative can be understood as a direct response to the vulnerabilities exposed during global supply chain disruptions and a proactive measure to maintain a technological edge over rivals, primarily China. The U.S. has long sought to control the flow of advanced technology, particularly cutting-edge semiconductors and AI chips, to prevent their use by competitors for military or strategic purposes. Pax Silica is designed to formalize and expand these efforts, drawing in key allies and partners such as Japan, South Korea, Taiwan, and the Netherlands, who are crucial nodes in the global semiconductor manufacturing network. The implicit goal, however, is to create a sphere of technological influence that aligns with American strategic interests and democratic values, thereby shaping the development and deployment of AI globally.
On the other side of this technological divide, the China-led WAICO was inaugurated in Shanghai in July 2026 with 29 founding members, a clear demonstration of Beijing’s ambition to forge an alternative global AI order. WAICO positions itself as a champion of the interests of emerging economies and of accessible AI, drawing upon the impressive surge in open-weight models from Chinese developers. This narrative directly counters the U.S. approach, which often involves restrictions and export controls on advanced AI models and hardware. China’s strategy is rooted in fostering a more inclusive and less restrictive global AI ecosystem, particularly appealing to developing nations that may feel marginalized by Western-centric technological policies. The rise of open-source and open-weight AI models from Chinese tech giants like Baidu (with Ernie Bot) and Alibaba (with Tongyi Qianwen) provides tangible alternatives to proprietary Western models, often at a lower cost and with greater flexibility for customization. WAICO is seen as an extension of China’s "digital Silk Road" initiative, leveraging its technological advancements and economic influence to build a network of digital partnerships and establish its own standards and norms for AI governance.
Initially, Washington indicated a degree of flexibility, with Jacob Helberg, the architect of Pax Silica and Under Secretary of State, suggesting at a Hudson Institute event in January that he wasn’t interested in a "purity test." He famously stated, "If you held everyone to that standard, you would quickly run out of friends." This stance implied that Pax Silica members could still engage with China on various fronts without necessarily jeopardizing their standing within the U.S.-led framework. However, this apparent openness appears to be rapidly eroding.
According to an internal draft viewed by Reuters, Washington is preparing a letter to Pax Silica partners, which starkly declares that "to be part of everything is to be part of nothing." While the State Department declined to comment on the leaked letter, its mere existence reveals a hardening philosophy among at least some U.S. officials: membership in the U.S.-led system may increasingly demand a clear choice against China’s rival order. This shift signals a move towards a more explicit technological decoupling, reminiscent of Cold War-era alliance structures where neutrality was often viewed with suspicion. For nations heavily reliant on both U.S. and Chinese technology, this ultimatum presents an acute dilemma, forcing them to weigh economic benefits against geopolitical allegiances.
This escalating pressure places the eleven-member Association of Southeast Asian Nations (ASEAN) in a particularly precarious position. The bloc possesses significant strengths, including data center operating costs below the global average, mature manufacturing infrastructure, rapid uptake of digital AI applications, and burgeoning clean energy initiatives. Critically, the region has long pursued a strategy of non-alignment and "centrality," aiming to chart a middle path between major global powers. ASEAN’s diverse economies, ranging from highly developed Singapore to rapidly emerging Cambodia and Laos, are deeply integrated into both U.S. and Chinese supply chains and digital ecosystems, making a definitive choice exceptionally challenging and potentially detrimental to their economic development.
ASEAN states would be wise to resist America’s call to allegiance for several compelling reasons. Firstly, the U.S. has demonstrated a willingness and ability to unilaterally restrict access to its leading AI models. A notable incident occurred in June this year when the U.S. Department of Commerce issued an emergency export control order demanding that Anthropic, a leading AI developer, restrict access to its frontier models, Mythos 5 and Fable 5, to U.S. nationals only. Although the order was later lifted, this episode served as a stark reminder that Washington could, at any given moment, limit other countries’ access to cutting-edge American AI technology, potentially undermining their own AI development and economic competitiveness. Such actions highlight the conditional nature of technological access from the U.S. and underscore the risks of over-reliance on a single source.
Secondly, Chinese AI models are considerably cheaper, thanks to more efficient designs, competitive pricing strategies, and reduced energy and infrastructure costs. This cost-effectiveness makes them highly attractive to governments and startups in ASEAN, particularly those with budget constraints or a focus on rapid deployment. Beyond cost, Chinese firms have established a significant lead in AI applications and diffusion, particularly in sectors vital to ASEAN economies such as manufacturing, logistics, smart city solutions, and e-commerce. Their practical, often turn-key solutions are well-suited for addressing immediate developmental needs and accelerating digital transformation across the region. This combination of affordability and practical applicability makes Chinese AI a compelling partner for ASEAN countries looking to leapfrog into the digital future.
Given these dynamics, a crucial question remains: Can ASEAN members draw from both the Chinese and Western ecosystems in pursuit of their own national interests? The answer, so far, is a resounding yes, to a surprising degree.
Despite the mounting pressure, only two ASEAN members—Singapore and the Philippines, both longstanding U.S. security allies—have officially signed on to the Pax Silica regime. This limited uptake suggests a widespread reluctance within the bloc to commit exclusively to one side. Other states with significant two-way exposure to both U.S. and Chinese technologies have strategically stayed out of the fray. This group includes Malaysia, with its growing semiconductor packaging capacity and data center presence; Indonesia, boasting a sizable talent dividend and vast untapped renewable energy potential; and Thailand, with a mature electronics and electric vehicle (EV) sector that has seen substantial Chinese investment and presence.
These nations are not merely exploiting loopholes in semiconductor export controls; they are actively pursuing a policy of hedging and strategic neutrality. Malaysia, for instance, has explicitly articulated a policy of neutrality in its approach to AI chips, with its former trade and industry minister stating that this includes securing access to chips from both NVIDIA (a dominant U.S. chipmaker) and Huawei (a prominent Chinese tech giant). Malaysia’s critical role in the global semiconductor supply chain, accounting for 13% of outsourced semiconductor assembly, testing, and packaging, and with its electrical and electronics (E&E) sector contributing 44.3% of the country’s total exports, gives it significant leverage and a vested interest in maintaining diversified access. This strategic positioning allows Malaysia to benefit from both Western cutting-edge chip design and Chinese manufacturing capabilities and market access.
Malaysia’s neighbors, Singapore and Indonesia, are also leaning into their existing strengths while courting both Chinese and U.S. players. Singapore, a technologically advanced city-state with scarce land, energy, and population, is leveraging these constraints to bolster its regulatory and agenda-setting power, particularly in areas like data centers and sustainability. This has transformed the city into a global reference point for "responsible" digital infrastructure, attracting investments from both Eastern and Western tech giants who seek a stable, well-regulated environment.
Indonesia, on the other hand, offers its abundant land and immense potential for power generation to global cloud and AI providers, even as it grapples with an underdeveloped infrastructure and human capital constraints. A prime example is the Indonesian 360 MW Batam campus, set to run 170,000 Nvidia accelerators from Q1 2027. This ambitious project is operated by the Australian AI infrastructure firm Firmus Technologies and co-developed by Singapore-headquartered DayOne, with Indonesia supplying the crucial land and power. This multi-national collaboration vividly illustrates how ASEAN countries can attract diverse partnerships by leveraging their unique assets, creating shared stakes that transcend geopolitical divides.
Despite these strategic maneuvers, ASEAN faces significant internal challenges that could impede its ambition to become a substantive player in the global AI arena. Talent flight remains a critical issue across many ASEAN economies, preventing them from developing the technocratic capacity needed for advanced technology and energy sectors. Malaysia, for example, needs approximately 50,000 engineers but produces only about 5,000 engineering graduates per year, creating a substantial deficit. Countries with far smaller digital ecosystems, like Cambodia and Laos, face even greater struggles to attract and retain AI talent. For these nations, the debate over hedging matters far less than their fundamental capacity building in education, research, and digital literacy.
A further bottleneck for ASEAN is energy security and sustainability. Coal and gas currently supply roughly 70% of generation across the top six ASEAN data center markets. This reliance on fossil fuels not only contributes to climate change but also exposes the region to volatile energy markets and supply disruptions. Indonesia’s blackouts in mid-2026, in part triggered by events in the Middle East affecting global energy prices and supply, starkly demonstrated the fragility of the region’s energy security. The burgeoning AI sector, with its insatiable demand for power, will only exacerbate this challenge. Therefore, substantial investments in renewables, comprehensive grid reform, and the exploration of civil nuclear pathways in countries like Vietnam, the Philippines, Malaysia, Indonesia, Thailand, and Singapore will be crucial. These energy initiatives will ultimately determine whether the region has the underlying infrastructure to host and shape AI development—regardless of which flags its cloud computing clusters fly.
Indeed, the pursuit of nuclear energy further highlights ASEAN’s pragmatic and diversified engagement strategy. Five ASEAN states are now actively pursuing nuclear energy; Singapore is studying the feasibility of Small Modular Reactors (SMRs) to address its land constraints, while Hanoi signed an intergovernmental agreement with Russia’s Rosatom in Moscow in March 2026, covering two VVER-1200 reactors for its Ninh Thuan 1 nuclear power plant. This willingness to engage with not just the U.S. and China, but also Russia, India, Japan, South Korea, and the European Union for critical infrastructure projects underscores ASEAN’s commitment to multilateralism and its determination to secure its energy future through diverse partnerships.
The U.S.’s hardening stance is indeed a wake-up call—albeit not necessarily to choose sides. If ASEAN’s hedging strategy vis-à-vis AI is to become more substantive and less opportunistic, it behooves all ASEAN members, especially those well-endowed with human capital and infrastructure, to significantly scale up and step up their domestic AI capabilities. This means investing heavily in STEM education, fostering local innovation ecosystems, developing robust regulatory frameworks, and building resilient, sustainable energy infrastructure. By focusing on internal strengths and strategic autonomy, ASEAN can position itself not merely as a prize to be won by competing powers, but as a significant, independent player in the future of global AI, capable of shaping its own destiny in an increasingly fractured technological world.
The authors would like to thank HKU Musketeers Foundation Institute of Data Science for providing research funding informing this article.
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