Association of Southeast Asian Nations countries can still avoid choosing between the United States and China in the artificial intelligence race, but only if they strengthen their own infrastructure, energy supplies and technical expertise, according to academics at the University of Hong Kong and Yonsei University.
The warning comes as Washington and Beijing build rival international networks around AI, semiconductors and critical minerals. The US-backed Pax Silica initiative is intended to secure supply chains for advanced technology, while China’s newly established World Artificial Intelligence Cooperation Organisation (WAICO) presents itself as a vehicle for wider access to AI and closer cooperation among emerging economies.
Twenty-nine countries signed an agreement establishing WAICO in Shanghai in July, with Indonesia among its founding members. Singapore and the Philippines, meanwhile, are the only ASEAN states to have joined Pax Silica so far.
The authors argue that the rest of the 11-member bloc has room to work with both sides. Malaysia, Indonesia and Thailand have substantial links to American and Chinese technology companies and have so far resisted pressure to align themselves exclusively with either power.
ASEAN’s balancing act on AI
Malaysia has been particularly explicit about its approach. Its investment and trade minister, Tengku Datuk Seri Zafrul Abdul Aziz, said the country wanted companies to retain access to chips from both Nvidia in the US and Huawei in China, while insisting that all relevant imports and transhipments must comply with Malaysian and international export controls.
That position reflects Malaysia’s role as a major centre for outsourced semiconductor assembly, testing and packaging. Its electronics and electrical sector accounts for more than two-fifths of the country’s exports, giving Kuala Lumpur a strong incentive to preserve relationships with competing technology powers.
Indonesia is pursuing a different advantage. Its land and potential power capacity have helped attract large-scale data-centre investment, even though the country continues to face shortages in infrastructure and skilled workers.
A proposed AI campus on Batam, developed by Australia’s Firmus Technologies and Singapore-based DayOne with Nvidia, is due to have a capacity of 360 megawatts. It is expected to begin operating in the first quarter of 2027 and could eventually support up to 170,000 Nvidia AI accelerators.
Singapore, by contrast, is using its limited land and energy resources to build influence through regulation and standards. Its policies on data centres and sustainability have helped make the city state a regional reference point for the development of digital infrastructure.
But the authors say ASEAN’s ability to exploit this position should not be confused with strategic strength. Many countries in the region lack the researchers, engineers and public-sector expertise needed to build and govern advanced AI systems.
Malaysia, they note, needs tens of thousands of additional engineers while producing only a fraction of that number each year. Cambodia and Laos face an even more fundamental problem in attracting and retaining people with specialist AI and digital skills.
Energy is another major constraint. Coal and gas still provide about 70 per cent of electricity generation across the region’s largest data-centre markets. Power shortages and blackouts in Indonesia during 2026 have highlighted the vulnerability of relying on fragile grids while demand from cloud computing and AI continues to grow.
The region is therefore examining a mixture of renewable energy, grid investment and nuclear power. Vietnam, the Philippines, Malaysia, Indonesia, Thailand and Singapore are among the countries considering different forms of nuclear development, while Singapore is studying the feasibility of small modular reactors.
The pressure from Washington may ultimately prove useful, the authors argue, not because ASEAN should surrender its room for manoeuvre, but because it exposes how little control the bloc currently has over the foundations of its own digital economy.
To make its balancing strategy meaningful rather than opportunistic, ASEAN governments will need to invest in domestic capabilities, reliable energy and coordinated rules. Without that groundwork, the choice between American and Chinese technology may remain less a matter of strategic independence than of which external power is willing to provide what the region lacks.
