Why Singapore is the only Southeast Asian country in Pax Silica, the United States’ new AI ‘inner circle’

Yet despite deepen trade relations between the United States and ASEAN countries like Thailand, Malaysia and Vietnam, Singapore remains the only signatory to the agreement in Southeast Asia. The move comes even as ASEAN countries like Malaysia invest in their own AI industries, such as semiconductors and data centers.

Singapore is “precisely the kind of ‘trust node’ that the United States seeks to anchor AI-era supply chains,” says Ruben Durante, professor of economics and senior chair at the National University of Singapore (NUS). Singapore “offers strong governanceregulatory credibility, capital markets, logistics and advanced data center and connectivity infrastructure.

The country has a long history with chips. The American company National Semiconductor opened a factory there in 1968, followed by the government’s establishment of Chartered Semiconductor Manufacturing in 1987. Singapore now accounts for about 10% of total chip production.

More recently, Singapore has worked to become an “AI nation”, investing in training programs to train its workforce and encouraging local AI development. The country has also attracted billions of dollars in cloud computing and data centers, including from big tech companies like Amazon And Google.

As the United States attempts to strengthen its AI supply chain, Singapore could also benefit from joining Pax Silica, suggests Atreyi Kankanhalli, professor of computer science at NUS. Being part of Pax Silica gives the country — which has less land area than New York City — a seat at the table when the United States discusses joint ventures in chip production and logistics. It also gives the resource-poor city-state a safety net to ward off future supply shocks, while allowing access to the latest AI technologies.

Both the United States and China are attempting to exploit their dominance in particular sectors against each other.

Washington has blocked the sale to China of advanced processors, essential for training and operating AI models, since 2022. Beijing, in turn, imposed export controls on rare earth minerals, a crucial component used for semiconductors and magnets in the AI ​​supply chain. (China has a stranglehold on rare earths, supplying 90% of rare earths and rare earth magnets processed worldwide.)

“The race to AI is often framed as a battle over data or models, but the real constraints are increasingly physical: chips, energy and supply chains,” says Simon Chesterman, professor of law at NUS and senior director of AI governance at AI Research Institute Singapore.

Besides Singapore, the United States included several close allies in the Pax Silica agreement: Japan, South Korea, Australia, the United Kingdom and Israel.

Japan and South Korea were chosen because they are the pillars of advanced semiconductor manufacturingsaid Durante of NUS. Additionally, Australia plays a central role for critical minerals, the UK helps set standards and intelligence alignment, and Israel brings high-end AI and defense-related innovations.

Experts believe that the United States’ AI inner circle will soon expand. NUS’ Durante says a small founding group would facilitate early coordination on sensitive issues. Several non-signatory countries, such as the Netherlands and the United Arab Emirates, were involved in early discussions on Pax Silica, which Durante considers an “outer circle” of contributors, even if they are not yet fully aligned with the United States.

“Expansion will depend on whether Pax Silica develops concrete mechanisms, such as financing, standards or procurement coordination,” he says, adding that countries that combine industrial relevance with a willingness to align with economic security priorities are the most likely candidates for addition.

Even though other Southeast Asian countries could eventually become important nodes in the AI ​​supply chain, they still face constraints such as lack of infrastructure and dispersion of talents, says Anant Shivraj, managing director and partner at Boston Consulting Group (BCG).

But that could soon change, as Vietnam and Malaysia strive to become key hubs in the region, particularly in semiconductors and data centers.

“The first wave of Pax Silica is more focused on countries that can anchor long-term control, governance, and security across the entire AI stack,” says Shivraj. “Many countries play a vital role, and although they are not yet part of the inner circle, that circle may well expand. »