The global AI landscape is increasingly being shaped by two rival world orders: Washington's Pax Silica and Beijing's World Artificial Intelligence Cooperation Organization (WAICO). Each embodies a sharply different vision of how power, technology, and access to critical AI infrastructure should be organized.

Pax Silica, launched by the United States in December 2025, purports to secure global supply chains for semiconductors and semiconductor manufacturing equipment, AI technologies, and rare earth minerals. Washington frames it as a cooperative organization rather than an instrument for enforcing its own policies.

The China-led WAICO, by contrast, was launched in Shanghai in July 2026 with 29 founding members. It positions itself as a champion of emerging economies and accessible AI, drawing on the impressive surge of open-weight models from Chinese developers.

Washington originally said it would not stop Pax Silica members from working with China. The initiative's architect, Under Secretary of State Jacob Helberg, indicated he was not interested in a "purity test" at a Hudson Institute event in January. "If you held everyone to that standard, you would quickly run out of friends," he said.

But U.S. patience may be running out. According to an internal draft viewed by Reuters, Washington is preparing a letter to Pax Silica partners stating that "to be part of everything is to be part of nothing." (The State Department declined to comment on the letter to Reuters.) Whether or not the letter is ever sent, it reveals a philosophy shared by at least some U.S. officials: if you are part of the U.S.-led system, you cannot be part of China's rival order.

Where does that leave the eleven-member Association of Southeast Asian Nations (ASEAN)? The bloc holds key strengths, including data center operating costs below the global average, mature manufacturing infrastructure, and rapid uptake of digital AI applications and clean energy (ASEAN Centre for Energy). The region has long sought to chart a middle path between the U.S. and China—a tradition rooted in ASEAN's founding principle of non-interference and its members' practice, dating back to the Cold War, of avoiding entangling alignment with any single great power.

ASEAN states would be wise to resist America's call for allegiance. In June this year, the U.S. Department of Commerce issued an emergency export control order demanding that Anthropic restrict access to its frontier models, Mythos 5 and Fable 5, to U.S. nationals only. Although the order was later lifted, the episode demonstrated Washington's ability to limit other countries' access to leading American models at will.

Chinese AI models, meanwhile, are considerably cheaper, owing to more efficient designs, more competitive pricing strategies, and lower energy and infrastructure costs. Chinese firms lead in AI applications and diffusion—particularly in manufacturing and logistics—making them attractive partners for ASEAN governments and startups.

The crucial question is whether ASEAN members can draw from both the Chinese and Western ecosystems in pursuit of their own interests. The answer: they can, to a surprising degree.

So far, only two ASEAN members—Singapore and the Philippines, both longtime U.S. security allies—have signed on to the Pax Silica regime. States with significant two-way exposure to both U.S. and Chinese technologies have stayed out of the fray. These include Malaysia, with growing semiconductor packaging capacity and data center presence; Indonesia, with a sizable talent dividend and untapped renewable energy; and Thailand, with a mature electronics and EV sector featuring a sizable Chinese presence.

Some ASEAN countries have tried to exploit loopholes in semiconductor export controls, but hedging is more than exploiting gaps. Malaysia has made clear that it pursues a policy of neutrality, and its former trade and industry minister has explicitly stated that neutrality includes securing access to chips from both NVIDIA and Huawei. Malaysia accounts for 13% of global outsourced semiconductor assembly, testing, and packaging, and the electrical and electronics (E&E) sector accounts for 44.3% of the country's total exports.

Malaysia's neighbors, Singapore and Indonesia, are leaning into their existing strengths in courting Chinese and U.S. players alike. Singapore is leveraging its scarce land, energy, and population to bolster its regulatory and agenda-setting power over data centers and sustainability—qualities that have made the city a reference point for "responsible" digital infrastructure.

Indonesia offers abundant land and power generation potential to global cloud and AI providers, even as it grapples with underdeveloped infrastructure and human capital constraints. Its 360 MW Batam campus will run 170,000 Nvidia accelerators from Q1 2027, operated by Australian AI infrastructure firm Firmus Technologies and co-developed by Singapore-headquartered DayOne, with Indonesia supplying the land and power.

Challenges remain. Talent flight across many ASEAN economies prevents them from developing the technocratic capacity needed for advanced technology and energy sectors. Malaysia needs 50,000 engineers but produces only 5,000 engineering graduates per year. Countries with far smaller digital ecosystems, such as Cambodia and Laos, struggle even more to attract and retain AI talent; for them, capacity building matters far more than hedging.

Energy is a further bottleneck. Coal and gas supply roughly 70% of generation across the top six ASEAN data center markets. Indonesia's blackouts in mid-2026, partly triggered by events in the Middle East, underscored how fragile the region's energy security is. Renewables, grid reform, and possible civil nuclear pathways in Vietnam, the Philippines, Malaysia, Indonesia, Thailand, and Singapore will determine whether the region has the underlying infrastructure to host and shape AI development—regardless of which flags its cloud computing clusters fly.

Five ASEAN states are now actively pursuing nuclear energy. Singapore is studying the feasibility of Small Modular Reactors (SMRs), while Hanoi signed an intergovernmental agreement with Rosatom in Moscow in March 2026 covering two VVER-1200 reactors for its Ninh Thuan 1 nuclear power plant. Nuclear energy illustrates how willing ASEAN is to engage with a wide range of partners—not just the U.S. and China, but also Russia, India, Japan, South Korea, and the European Union.

The U.S.'s hardening stance is indeed a wake-up call—though not necessarily one to choose sides. If ASEAN's AI hedging strategy is to become more substantive and less opportunistic, all ASEAN members, especially those well-endowed with human capital and infrastructure, must scale up and strengthen their domestic AI capabilities. Much will depend on how Washington's position evolves—whether the draft letter is formally sent, and how strictly any such side-picking demand is enforced against smaller economies that depend on both markets.

The authors thank the HKU Musketeers Foundation Institute of Data Science for research funding informing this article. The opinions expressed in Fortune.com commentary pieces are solely those of the authors and do not necessarily reflect the views of Fortune.

Source: Fortune