Despite North America’s early lead in generative AI and advanced artificial intelligence technology, it appears that Southeast Asia is rapidly closing the gap in a way that’s left regional innovators with a strong hand in the ongoing trade uncertainty with the United States. generative AI Across the Asia-Pacific (APAC) region, the perceived value of generative AI technologies is just one percentage point behind North America, while a higher ratio of firms are actively experimenting with GenAI, according to Boston Consulting Group data. Not only are APAC firms investing a higher proportion of their annual revenue in generative AI, but total investments throughout the region are expected to reach $175 billion by 2028. reach $175 billion reach $175 billion This doesn’t simply point to an AI boom throughout Southeast Asia but suggests that artificial intelligence will play a critical role in the region’s economic growth over the years ahead. For China, a nation intent on securing its own economic recovery through growth-focused government stimulus, AI and GenAI innovation have become a significant focus of the Chinese Communist Party (CCP). Today, Chinese firms own around 60% of the world’s AI patents, with the Asian powerhouse firmly focused on becoming a leader in the emerging technology. around 60% around 60% Catalyst for Regional Growth The growth of artificial intelligence throughout Southeast Asia is set to extend throughout a vast range of industries, with many startups in the region seeking to gain access to large-language models (LLMs) in a similar way to the adoption of AI technologies within China and the United States. Crucially, local AI models can help to improve productivity and growth prospects to attract local businesses, forming a key reason behind the growing popularity of opening businesses in China. Although Southeast Asian firms using Chinese LLMs could generate higher exposure to China’s political and cultural variations within the region, models like DeepSeek-R1 can be post-trained to maintain a smooth, trustworthy flow without the risk of biases creeping in. This commitment to open-source impartiality can accelerate GenAI adoption among regional firms. While China has positioned itself as a pioneering location for the growth of generative AI, the innovations will benefit many Southeast Asian nations. Hazmi Yusof, country head of Frost & Sullivan Malaysia, has highlighted that the technology will become a key player in mitigating the impact of declining populations throughout Asia by 2040. mitigating the impact of declining populations mitigating the impact of declining populations As a major time-saving technology, artificial intelligence can help workforces to spread responsibilities more effectively in industries with shrinking talent pools to uphold higher levels of productivity throughout Southeast Asian economies. Strong Hand Amid Trade Uncertainty At a time when geopolitical uncertainty is forcing many Southeast Asian nations to adapt to the prospect of a trade war with the United States, it’s the prospect of China’s acceleration throughout AI markets that can be a major source of regional resilience. China’s acceleration throughout AI markets Crucially, it took Nvidia CEO Jensen Huang just two days to arrive in Beijing after President Trump announced restrictions on the company’s sales to China in April. The access of China’s AI startups to strong government support and heavy global demand is likely to drive more companies to the region in a bid to maintain their market position as the technology grows. to drive more According to 2024 figures, China created more than 16,000 undergraduate spots in leading universities to study AI, and data suggests the figure will grow to 20,000 in 2025, with institutions like Peking University, Renmin University, and Shanghai Jiao Tong University expanding programs focusing on AI, semiconductor engineering, biomedicine, and other advanced fields. more than 16,000 undergraduate spots more than 16,000 undergraduate spots The Environmental Cost of Adoption Southeast Asia’s AI optimism appears to be coming at a cost. According to a report by Greenpeace East Asia, the region has been heavily impacted by a global 350% increase in electricity consumption rates in AI chip manufacturing since 2023. The rising energy costs of semiconductor manufacturing in nations like Taiwan and South Korea could threaten climate change targets. The rapid expansion of data centers around the world has risen from 500,000 in 2012 to more than eight million today. Because water is needed to cool the hardware stored in data centers, it’s estimated that by 2027, AI infrastructure could consume up to six times as much water as Denmark. Given that the market for green businesses in Asia is set to grow to between $4 and $5 trillion by 2030 while creating around 232 million jobs per year over the same period, maintaining a level of commitment to sustainability could be a significant challenge for a region readying to incorporate AI. between $4 and $5 trillion between $4 and $5 trillion As initiatives grow in Southeast Asia, we may see AI tools drive environmental efficiency across various other industries to adopt the technology. However, it could also risk undermining China’s strength in eco-friendly innovation. AI to Deliver Economic Growth According to IDC data, artificial intelligence has the potential to contribute $19.9 trillion to the global economy through 2030 and become responsible for 3.5% of global GDP over the same period. contribute $19.9 trillion contribute $19.9 trillion At a time when Southeast Asia is coming to terms with tariff uncertainty with the United States, building a local AI infrastructure to boost economic growth and self-sufficiency throughout the region will be a key factor in achieving resilience against geopolitical challenges. China may be challenging for AI dominance against North America, but its success will be a major boost to economies throughout Southeast Asia at a time when it’s needed more than ever.

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