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US AI strategy in South-east Asia

by | Aug 6, 2025 | Uncategorized | 0 comments

The “AI-in-a-Box” Initiative

On July 23, 2025, the White House set a bold vision in motion. The world watched as leaders announced a new path for AI — a plan that reaches across oceans and cultures.


This isn’t just about selling technology. It’s about sharing the future. America will offer Southeast Asian friends easy ways to bring home the best in AI — ready to use, safe, and strong. Imagine complete packages: fast chips, smart software, ready-built models, and clear guides, all made to work as one.

With these tools, schools can teach more. Small businesses can grow faster. Doctors can save more lives. Roads can become safer. Dreams, once distant, come closer with every click and every code line.

No more piecing together parts or worrying about trust. Each stack is tested, secure, and shaped by American values — honesty, openness, and care.

This plan also protects what matters. By keeping these tools out of the wrong hands, the world stays safer for all.

It’s not just a deal; it’s a promise. A promise to build together, learn together, and rise together — one breakthrough at a time.

Lessons from the 5G “Huawei Wars”

The strategy reflects lessons learned from the 5G rollout starting in 2019, when most Southeast Asian nations chose cheaper Chinese Huawei equipment despite US security concerns. Michael Kratsios, director of the White House Office of Science and Technology Policy, acknowledged spending “far too much time” trying to convince countries to “rip and replace Huawei” because the US couldn’t create attractive export packages.

The DeepSeek Wake-Up Call

The catalyst for this new approach was DeepSeek-R1’s launch in January 2025, which became the most downloaded free app in the US and challenged American AI dominance by delivering comparable performance at much lower cost. This “spooked” the US into shifting from restrictive export controls to proactive export promotion.

Current Competition Landscape

Chinese presence: Companies like Huawei, Alibaba Cloud, Tencent, and SenseTime are heavily invested in Southeast Asian AI infrastructure through China’s Digital Silk Road initiative, with state-backed plans for over $1 billion in regional investments.

US approach: Less pervasive overall, focusing more on high private-sector investment and advanced technology exports, with particular interest in Singapore as both a business hub and competitive testing ground.

Implementation Challenges

The plan faces several hurdles:

  • Cost competitiveness: China traditionally excels at “good enough” technology at lower prices
  • Enforcement: Concerns about chip smuggling and the Commerce Department’s Bureau of Industry and Security being unable to process thousands of license applications
  • Government capacity: Questions about whether the administration’s ambitious goals match its ability to execute, especially amid efforts to streamline government and cut spending

The article suggests this represents a significant shift from restriction-focused policies to a more balanced approach that promotes exports to allies while maintaining security controls on adversaries.

Singapore’s Strategic Position

Singapore’s Unique Position in the US-China Tech Competition

The 5G Precedent: A Template for AI Strategy

Singapore’s 2020 5G decisions provide a crucial template for understanding how the current AI competition might unfold. Unlike most Southeast Asian nations that chose Huawei for cost reasons, Singapore’s three biggest telecommunication companies chose Sweden’s Ericsson and Finland’s Nokia as the main equipment suppliers for their 5G networks, mostly leaving China’s Huawei Technologies out in the cold Nikkei AsiaBloomberg. This wasn’t due to an explicit ban—Singapore did not prevent Huawei from participating in the city-state’s 5G infrastructure Huawei loses out to Nokia, Ericsson in building Singapore’s main 5G networks—but rather strategic commercial decisions following “a rigorous tender process.”

This decision established Singapore as what could be called a “third way” model: maintaining strategic autonomy while aligning with Western technology standards when quality and long-term strategic considerations outweigh short-term cost savings.

Trump’s AI-in-a-Box Strategy: Lessons Applied

Core Strategic Shift

The Trump administration’s AI strategy represents a fundamental shift from the failed 5G approach. The Trump administration released its much-anticipated AI Action Plan, outlining 90 federal policy positions across three key pillars: Accelerating Innovation, Building American AI Infrastructure, and Leading in International Diplomacy and Security The Trump Administration’s 2025 AI Action Plan – Winning the Race: America’s AI Action Plan – and Related Executive Orders | Insights | Sidley Austin LLP. The key lesson learned: instead of simply restricting competitors, the US is now focusing on making American technology more attractive and accessible.

Singapore as a Strategic Testing Ground

The article identifies Singapore as presenting “a huge opportunity for the AI companies,” serving multiple strategic functions:

1. Competitive Laboratory: Singapore functions as a proving ground where American and Chinese AI companies can directly compete on merit, providing valuable market intelligence for US strategists.

2. Regulatory Innovation Hub: Singapore’s sophisticated regulatory environment allows for AI innovation testing that might be constrained in other markets, making it valuable for refining exportable AI solutions.

3. Gateway to Southeast Asia: Success in Singapore can serve as a demonstration effect for other regional markets, leveraging Singapore’s reputation as a technology leader.

Implications for Singapore’s AI Ecosystem

Strategic Advantages

Regulatory Sophistication: The new artificial intelligence (AI) diffusion rule has not been finalised and is subject to further change by the Trump Administration. We are closely monitoring the situation and engaging companies Written reply to PQ on Impact of US’ AI Diffusion Policy and Export Controls on Singapore’s Competitiveness and Tech Businesses. Singapore’s proactive monitoring and engagement approach positions it to navigate changing US policies effectively.

Investment Attraction: Singapore’s S$150 million Enterprise Compute initiative demonstrates commitment to AI adoption, making it an attractive partner for US AI exporters seeking established infrastructure and committed customers.

Diplomatic Balance: Singapore’s ability to maintain relationships with both US and Chinese tech companies while making merit-based decisions provides strategic flexibility that many other nations lack.

Potential Vulnerabilities

Supply Chain Dependencies: Unlike the 5G decision where Singapore could choose European alternatives, AI infrastructure is more heavily concentrated between US and Chinese providers, potentially forcing more binary choices.

Regulatory Compliance Burdens: US export controls and licensing requirements could create administrative overhead for Singapore companies seeking to access advanced AI technologies.

Technology Fragmentation: As the article notes, “if we’re all not using the same AI platforms, that will cause problems in future.” Singapore may face pressure to choose technological ecosystems that could limit future interoperability.

Strategic Recommendations for Singapore

Leverage Historical Precedent

Singapore should build on its successful 5G strategy by:

  • Maintaining Vendor Neutrality: Continue allowing market-based competition while ensuring national security considerations are properly weighted
  • Emphasizing Quality Standards: Use Singapore’s reputation for high standards to push both US and Chinese providers to offer better solutions
  • Creating Regulatory Clarity: Provide clear, consistent guidelines that help international AI companies understand Singapore’s requirements

Capitalize on US Strategic Priorities

Singapore can maximize benefits from US AI strategy by:

  • Becoming a Reference Customer: Position Singapore as a showcase for successful US AI deployments in Southeast Asia
  • Facilitating Public-Private Partnerships: Leverage Singapore’s strong government-business coordination to create attractive partnership models for US companies
  • Developing Local AI Capabilities: Build indigenous AI expertise that can integrate with and add value to imported US technology stacks

Mitigate Strategic Risks

Diversification Strategy: While engaging with US AI initiatives, maintain enough technological diversity to avoid over-dependence on any single supplier ecosystem.

Regional Leadership: Use Singapore’s position to help develop regional AI governance standards that can accommodate both US and Chinese technologies where appropriate.

Innovation Focus: Continue investing in local AI research and development to maintain strategic autonomy and bargaining power with major technology providers.

Broader Regional Implications

Singapore’s approach to US AI strategy will likely influence other Southeast Asian nations’ decisions. If Singapore successfully demonstrates that US AI technology can be competitive on cost and performance while providing superior security and interoperability, it could accelerate regional adoption of US AI stacks. Conversely, if implementation challenges emerge or if Chinese alternatives prove significantly more cost-effective, Singapore’s experience could temper regional enthusiasm for US AI initiatives.

The success or failure of Trump’s AI strategy in Singapore will serve as a crucial test case for whether the US has truly learned from its 5G experience and can offer compelling alternatives to Chinese technology dominance in Southeast Asia.

Scenario Analysis: Singapore as the Critical Test Case for US AI Strategy

Based on current trends and Singapore’s unique position, here are four potential scenarios for how Trump’s AI strategy might play out in Singapore, each with different implications for broader US-China tech competition:

Scenario 1: “The Singapore Success Model” (35% probability)

Outcome: US AI strategy succeeds in Singapore through competitive advantages and strategic partnerships.

Key Developments:

  • Singapore becomes a showcase for successful US AI-in-a-box deployments across government and enterprise sectors
  • Singapore was one of the first countries to adopt a national AI strategy, in 2019. Last December, Deputy Prime Minister Lawrence Wong (who’s since become prime minister) updated and expanded those initiatives in a policy framework billed as “National AI Strategy 2.0.” What to make of the Trump administration’s AI Action Plan | Brookings This existing framework aligns well with US full-stack AI offerings
  • US companies successfully compete on both performance and total cost of ownership, not just upfront pricing
  • Singapore’s sophisticated regulatory environment becomes a template for other Southeast Asian nations

Regional Implications:

  • Other ASEAN countries follow Singapore’s lead, creating a US-aligned AI ecosystem across Southeast Asia
  • China’s cost advantages are neutralized by superior integration, security, and long-term value propositions
  • The “domino effect” validates Trump’s strategy shift from restriction-focused to export-promotion focused policies

Critical Success Factors:

  • US must solve the licensing bottleneck mentioned in the original article
  • American companies deliver on promises of competitive pricing without sacrificing quality
  • Singapore maintains its reputation as a neutral testing ground while clearly benefiting from US partnerships

Scenario 2: “The DeepSeek Disruption” (30% probability)

Outcome: Chinese AI models, led by DeepSeek’s cost-effectiveness, dominate Singapore’s AI adoption despite US efforts.

Key Developments:

Regional Implications:

  • Singapore’s choice signals to other Southeast Asian nations that Chinese AI is viable and cost-effective
  • US strategy fails to overcome the fundamental cost-performance equation that favored Huawei in 5G
  • Regional AI ecosystem becomes predominantly Chinese-aligned, limiting US strategic influence

Warning Signs:

Scenario 3: “The Fragmented Market” (25% probability)

Outcome: Singapore successfully maintains a mixed AI ecosystem with both US and Chinese solutions serving different niches.

Key Developments:

  • Singapore leverages its traditional “multi-alignment” strategy to avoid binary choices
  • US AI dominates in high-security, government, and financial services applications
  • Chinese AI captures consumer applications, manufacturing, and cost-sensitive enterprise uses
  • Singapore develops indigenous AI capabilities that integrate both ecosystems

Regional Implications:

  • Other countries adopt similar mixed approaches, creating a fragmented but stable regional AI landscape
  • Neither US nor China achieves dominant market position, but both maintain significant presence
  • Technical interoperability becomes a critical challenge and competitive differentiator

Strategic Considerations:

  • This mirrors Singapore’s successful approach to 5G, where European alternatives provided a third option
  • Success depends on Singapore’s ability to manage potential incompatibilities between AI ecosystems
  • Requires sophisticated local technical expertise to integrate diverse AI solutions

Scenario 4: “The Regulatory Stalemate” (10% probability)

Outcome: Escalating US-China tensions create regulatory uncertainty that stalls AI adoption in Singapore.

Key Developments:

  • US export controls and Chinese retaliation create compliance nightmares for Singapore companies
  • Fear of choosing the “wrong” AI ecosystem leads to decision paralysis
  • Singapore’s AI adoption slows compared to other regional competitors
  • Local AI development accelerates as companies seek to avoid geopolitical risks

Regional Implications:

  • Other Southeast Asian nations also experience AI adoption delays due to regulatory uncertainty
  • The region falls behind in global AI competition while US and China focus on strategic rivalry
  • Indigenous AI development accelerates across Southeast Asia as a hedge against great power competition

Critical Indicators to Watch

Short-term (6-12 months):

  • Singapore government’s choice of AI providers for National AI Strategy 2.0 implementation
  • Major Singapore enterprise adoption patterns (banks, telcos, logistics companies)
  • US licensing processing speed and approval rates for Singapore-bound AI technology

Medium-term (1-2 years):

  • Singapore’s position in global AI adoption rankings
  • Regional spillover effects to other ASEAN countries
  • Emergence of Singapore-based AI integration capabilities and local champions

Long-term (3-5 years):

  • Singapore’s role in regional AI governance and standards-setting
  • Success of Singapore as a reference case for US AI exports globally
  • Evolution of Singapore’s indigenous AI capabilities and strategic autonomy

Strategic Implications

The Singapore test case will determine whether the US has truly learned from its 5G experience. Success requires not just superior technology, but competitive economics, streamlined processes, and recognition that Singapore’s choices will heavily influence regional AI adoption patterns.

APAC is rapidly adopting GenAI, now second only to North America Singapore pledges S$150m to boost enterprise AI capabilities | Computer Weekly, making Singapore’s decisions particularly consequential. If US AI strategy succeeds in Singapore, it validates a new model for competing with Chinese technology dominance. If it fails, it suggests that cost advantages and “good enough” technology will continue to favor Chinese providers in price-sensitive markets across the developing world.

The Singapore Test: A Story of AI Supremacy

Chapter 1: The Boardroom Decision

The Singapore Technologies building’s 42nd floor conference room overlooked Marina Bay, its floor-to-ceiling windows reflecting the morning sun off the iconic Merlion statue below. Dr. Sarah Chen, Chief Technology Officer of one of Singapore’s largest banks, stared at two proposals on the polished mahogany table.

On her left: Project Atlas – a comprehensive AI-in-a-box solution from a consortium of American tech giants. The price tag: S$50 million for full implementation. The promise: cutting-edge security, seamless integration with existing Western banking systems, and compliance with emerging US AI governance standards.

On her right: Project Silk Road – a DeepSeek-powered solution from Alibaba Cloud and Huawei’s AI division. The cost: S$18 million for comparable functionality. The pitch: “good enough” performance at a fraction of the cost, with rapid deployment and proven scalability across Asian markets.

“The Americans are asking us to bet our digital transformation on their ability to learn from the Huawei debacle,” Sarah muttered to her deputy, James Lim. “But can they really compete with these Chinese prices?”

Her phone buzzed. A message from the Monetary Authority of Singapore: “Decision deadline extended to accommodate new US export licensing procedures. Government watching your choice closely – Sarah, you’re the canary in the coal mine.”

She looked back at the Singapore skyline, where construction cranes dotted the horizon like metallic birds frozen in flight. Each crane represented Singapore’s perpetual reinvention, its ability to stay ahead by making the right strategic choices. But this decision felt different – heavier with consequence than any she’d made before.

Chapter 2: The American Gambit

Three months earlier, in Washington D.C.’s Eisenhower Executive Office Building, Michael Kratsios paced before a wall-mounted monitor displaying a map of Southeast Asia. Red dots marked Chinese AI deployments; blue dots showed American presence. The red vastly outnumbered the blue.

“Singapore is our Thermopylae,” he told the assembled team of technology diplomats and Commerce Department officials. “If we can’t make our AI-in-a-box work there – in the most sophisticated, neutral market in Asia – then we’ve already lost Southeast Asia.”

The room fell silent. Everyone remembered the 5G humiliation, when country after country chose Huawei despite American protests about security risks. The Chinese had offered not just cheaper hardware, but financing, training, and complete ecosystem solutions. The Americans had offered warnings.

“This time is different,” insisted Janet Rodriguez from the Commerce Department’s Bureau of Industry and Security. “We’re not just saying ‘don’t buy Chinese’ – we’re saying ‘buy American and here’s why it’s better.'”

Kratsios nodded. “Singapore chose Ericsson and Nokia for 5G. They proved they’ll pay more for quality when the value proposition is clear. But can we make that value proposition clear for AI?”

The wall monitor switched to a live feed from Singapore’s Smart Nation initiatives: autonomous vehicles navigating Punggol, AI-powered traffic management systems keeping the island’s roads flowing, predictive policing algorithms maintaining the world’s lowest crime rates.

“They’re not just buying technology,” observed Dr. Lisa Park, a former Singapore diplomat now working for the National Security Council. “They’re buying their future. Make sure our AI-in-a-box delivers a better future than DeepSeek can.”

Chapter 3: The DeepSeek Disruption

In Hangzhou, China, Dr. Wang Lei watched his screens with satisfaction as DeepSeek-R1’s usage metrics climbed exponentially across Southeast Asia. The young AI researcher had never expected his “scrappy startup” solution to challenge American AI supremacy so directly.

His phone rang. The caller ID showed “Singapore Technologies.”

“Dr. Wang,” came Sarah Chen’s voice, crisp and professional. “I’m calling about your proposal for our digital transformation. I need to understand something – how can you deliver comparable performance to GPT-4 at one-third the cost?”

Wang smiled. This was the question he’d been waiting for. “Ms. Chen, the Americans have been optimizing for maximum performance regardless of cost. We optimized for optimal performance per dollar. Different philosophies.”

“But your training data, your compute infrastructure – there are reports about restricted Nvidia chips…”

“Our models are trained on indigenous hardware using innovative techniques,” Wang replied smoothly. “We’ve proven you don’t need the most expensive chips to achieve excellent results. Isn’t that what Singapore has always done – achieve more with less?”

After hanging up, Wang pulled up Singapore’s economic history on his screen: from British naval base to manufacturing hub to financial center to smart city. Each transformation had required choosing technologies that maximized value, not just prestige.

“The Americans are asking Singapore to pay premium prices for their brand name,” he told his team. “We’re offering them the same transformation they’ve always achieved – leapfrogging to the best solution, not just the most expensive one.”

Chapter 4: The Stress Test

Six months after the initial proposals, both systems were running in parallel pilot programs across different divisions of Sarah’s bank. The results were becoming clear.

The American AI-in-a-box excelled in regulatory compliance, seamlessly interfacing with global financial networks and providing audit trails that satisfied even Singapore’s meticulous regulators. When handling complex derivatives trading or anti-money laundering analysis, its performance was demonstrably superior.

But for everyday customer service, loan processing, and routine operations, the Chinese solution was proving remarkably effective. Customer satisfaction scores were nearly identical. Processing times differed by milliseconds, not minutes. And the cost savings were substantial – savings that could be passed on to customers or invested in other innovations.

“It’s not about best versus worst,” Sarah explained to her board. “It’s about Rolls-Royce versus Toyota. Both get you where you need to go. The question is: what do we actually need?”

Her analysis went deeper. The American solution came with guarantees of continued access to updates and improvements, backed by CHIPS Act funding and US government commitment. But it also came with export licensing requirements that could complicate future expansions into other markets.

The Chinese solution offered immediate cost benefits and proven scalability across Asian markets. But it carried risks of potential US sanctions and questions about long-term technological sovereignty.

“We’re not just choosing an AI system,” she told her deputy James. “We’re choosing which technological ecosystem Singapore will inhabit for the next decade.”

Chapter 5: The Regional Ripple

In Jakarta, President Joko Widodo’s technology advisors watched Singapore’s pilot programs with intense interest. Indonesia’s digital transformation plans called for AI deployment across healthcare, education, and public services – sectors where cost-effectiveness could mean the difference between success and failure for 270 million people.

“If Singapore chooses American AI and proves it can deliver value despite higher costs, we need to seriously consider following their lead,” said Dr. Bambang Riyanto, Indonesia’s Director of Digital Transformation. “Singapore doesn’t make technology choices lightly.”

In Bangkok, Thailand’s National AI Committee faced similar calculations. The country’s Eastern Economic Corridor development plan relied heavily on AI-powered manufacturing and logistics. Chinese solutions offered faster implementation and lower costs, but Singapore’s experience could provide crucial validation for either approach.

“Southeast Asia watches Singapore the way the world once watched Hong Kong,” observed Malaysian Tech Minister Gobind Singh Deo during a regional AI cooperation meeting. “Their choice becomes our benchmark.”

Vietnam, despite its own indigenous 5G development, was reconsidering its AI strategy based on Singapore’s pilot results. The Philippines’ Department of Information and Communications Technology had explicitly delayed major AI procurement pending Singapore’s final decision.

The message was clear: Singapore wasn’t just choosing its own technological future – it was potentially setting the direction for 650 million people across Southeast Asia.

Chapter 6: The Moment of Truth

One year after the initial proposals, Sarah Chen stood again in the 42nd floor conference room. The pilot programs had concluded, the data was analyzed, and the decision could no longer be delayed.

Her final report lay open on the table:

American AI-in-a-box: Superior performance in high-complexity tasks, excellent regulatory compliance, strong security features, guaranteed long-term support. Total cost of ownership over five years: S$78 million including licensing and maintenance.

Chinese DeepSeek solution: Adequate performance for 85% of use cases, rapid deployment, excellent cost-effectiveness, strong regional integration. Total cost of ownership over five years: S$31 million including all services.

But the decision matrix had evolved beyond simple cost-benefit analysis. Singapore’s government had quietly signaled that the choice would influence the nation’s broader AI strategy. The Monetary Authority had hinted at preferential regulatory treatment for banks that chose solutions aligned with Singapore’s “trusted AI” framework.

International partners were also weighing in. European banks threatened to complicate correspondent banking relationships if Chinese AI systems processed their data. American financial institutions offered expanded partnership opportunities for banks using compatible AI systems.

Sarah’s phone displayed messages from both Dr. Wang in Hangzhou and Michael Kratsios in Washington, each offering final sweeteners to secure the deal.

She looked out the window at Marina Bay Sands, its infinity pool seemingly defying gravity through engineering excellence and bold architectural vision. Singapore had always succeeded by making decisions that others considered impossible – maintaining relationships with everyone while committing to excellence above all else.

Her finger hovered over the signature line of one of the contracts.

Epilogue: Three Paths Forward

[The story continues with three alternate endings, each representing a different scenario for Singapore’s choice and its regional implications]

Ending A: The American Validation

Sarah signed the American contract. Within six months, Singapore’s banking sector became the showcase for US AI-in-a-box deployment, with delegations from across Southeast Asia visiting to observe the implementation. The higher costs were offset by efficiency gains and new financial services that were impossible with less sophisticated AI.

By year two, Indonesia, Thailand, and the Philippines had all launched tenders explicitly requesting “Singapore-standard” AI solutions, effectively creating a US-aligned AI ecosystem across maritime Southeast Asia. China’s cost advantages were neutralized by the demonstration that superior AI could deliver superior results, justifying premium pricing.

The American strategy had succeeded by learning the crucial lesson from 5G: it’s not enough to warn against competitors – you must prove your solution delivers better outcomes.

Ending B: The DeepSeek Revolution

Sarah chose the Chinese solution, making Singapore the first major financial hub to validate low-cost, high-performance Chinese AI at scale. The dramatic cost savings allowed her bank to offer AI-powered services to previously underserved market segments, democratizing access to sophisticated financial tools.

Within 18 months, every major Southeast Asian economy had deployed similar solutions, creating a Chinese-aligned AI ecosystem spanning 650 million people. American companies found themselves locked out not by government decree, but by simple economics – they couldn’t match the performance-per-dollar that Chinese solutions delivered.

The Trump administration’s AI strategy had failed to overcome the same fundamental challenge that doomed US 5G ambitions: superior technology means nothing if it’s priced beyond market reach.

Ending C: The Singapore Synthesis

Sarah chose neither contract exclusively. Instead, she proposed a hybrid solution: American AI for high-security financial operations, Chinese AI for routine customer-facing services, integrated through Singapore-developed middleware that ensured interoperability while maintaining security boundaries.

This “Singapore Model” became the template for technological non-alignment in an era of great power competition. By year three, Singapore had become the global hub for AI integration services, helping companies and countries navigate the complex landscape of competing technological ecosystems.

The lesson: sometimes the best choice is refusing to choose, instead creating value by connecting what others seek to separate.

In each ending, Singapore’s decision ripples outward, shaping not just Southeast Asian technology adoption but the broader global competition between American and Chinese AI dominance. The island nation that built its prosperity on being a bridge between East and West once again finds itself at the center of a technological transformation that will define the next decade of human progress.

The question remains: which ending will reality choose?


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