At the 46th ASEAN Summit in Malaysia late last month, Southeast Asia’s leaders reaffirmed their shared commitment to an “inclusive and sustainable future” under Malaysia’s chairmanship of the bloc. As geopolitical tensions escalate, fragmenting regional and global supply chains, it is increasingly clear that ASEAN’s relevance in the global value chain will depend on its ability to establish interoperable, cross-border frameworks for cooperation.
This imperative becomes even more critical in the context of the emerging AI value chain. In reflecting on this, three key insights come to mind.
1) ASEAN Needs an Interoperable AI Production Base
All 10 ASEAN member states have now published national AI strategies. Singapore’s NAIS 2.0 pushes practical, sector-level AI. Malaysia’s MADANI AI Framework emphasizes ethical and inclusive development. Indonesia’s BRAIN project links AI to economic modernization.
But taken together, these efforts reveal a structural problem: fragmentation. ASEAN still lacks aligned data protection regimes, shared compute infrastructure, or interoperable standards for AI. These gaps limit scalability and regional trust.
In this respect, Europe’s aspiration for a “Silicon Schengen” offers a useful point of comparison. While the scheme has no formal members, the idea draws from real initiatives like the Silicon Europe Alliance, a robust network of 12 leading technology clusters across the continent. These clusters focus on microelectronics, photonics, and software, and bring together more than 2,500 companies and research institutions, ranging from SMEs to global giants.
For Southeast Asia, the spirit behind Silicon Schengen is worth emulating. It should work toward the creation of an ASEAN AI archipelago: a connected chain of digital ecosystems spanning the region, giving Southeast Asians the chance to shape a model uniquely their own.
The recently concluded inaugural ASEAN-GCC-China Summit underscored the centrality of regional cooperation and ASEAN’s growing potential as a production hub, linking Gulf capital with Chinese technological strengths. Amid the fracturing of the global trade system, the idea of an ASEAN AI archipelago could serve as a foundational layer in a new architecture of digital trade, innovation, and production.
2) Localization as Design Principle
Before ASEAN can build a unified, AI-enabled production base, it must first achieve two goals: local relevance and workforce readiness. AI will need more than scale or technical sophistication in order to thrive. It will succeed when it is trusted, user-friendly, and adapted to the rhythms of local businesses and communities.
This is what makes SEA-LION, Southeast Asia’s first multilingual large language model, so important. Trained on Bahasa Indonesia, Vietnamese, Thai, Tagalog, and English, it was built not only to understand language, but to operate efficiently on local infrastructure, even for smaller businesses. Given that SMEs make up 97 percent of all enterprises and employ over 85 percent of the region’s workforce, if AI cannot work for SMEs, it cannot work for ASEAN.
Singapore offers a preview of what’s possible when policy, partnership, and capability-building align. In 2023, thousands of local SMEs adopted AI tools, and the national target is to raise this number to 15,000 by 2026. Over 8,000 mid-career professionals have already completed structured AI training through public programs.
At Temus, we’ve contributed to this effort through a strategic partnership with AI Singapore, working directly with local organizations to prepare datasets, implement practical AI tools, and sustain them in real-world environments. Our collaborative programs, including AI for Leaders and the AI Apprenticeship Programme, are designed both to educate and to embed lasting capability. By 2025, over 30 AI apprentices had been hosted at Temus, gaining firsthand experience while helping organizations build capacity from within.
3) AI Adoption Requires a Resilient Semiconductor Backbone
None of this is possible without chips. The ASEAN semiconductor market is estimated to reach $52 billion by 2032. Singapore contributes 11 percent of global semiconductor assembly, testing, and packaging capacity, while Malaysia adds another 7 percent. Vietnam and the Philippines are rapidly scaling their capabilities.
But the real promise of an ASEAN AI archipelago lies in integration.
One potential example is the Johor–Singapore Special Economic Zone (SEZ), where Singapore can provide its strengths in integrated circuit design, R&D, and advanced manufacturing, while Johor offers scalable land, cost-competitive labor, and logistics infrastructure. Just north of the SEZ, Penang, home to more than 350 electronics firms, including Intel and AMD, could add vital capacity in wafer fabrication, assembly, and back-end testing.
In addition to being geographically proximate, these nodes are tied together by policy coherence. The SEZ agreement established mutual recognition of professional qualifications, streamlined customs procedures, and flexible labor mobility, which enable cross-border teams’ supply chains to function with agility.
For global chip firms like Nvidia, access to an ASEAN AI archipelago could be hugely beneficial.
Nvidia’s greatest vulnerability is not technological, but geopolitical. Its AI chips depend on a complex global supply chain including design and IP from the U.S., wafers from Taiwan and Japan, EUV lithography from ASML in the Netherlands, fabrication at TSMC in Taiwan, and packaging and testing in South Korea, Malaysia, and Vietnam. Finally, Southeast Asia’s logistics hubs push these high-value chips out to markets around the world. As export controls tighten and chokepoints multiply, partnerships in Singapore, Malaysia, Vietnam, and Thailand would offer distributed resilience.
As ASEAN looks ahead, Southeast Asia’s strategic relevance in the global AI value chain must evolve. If the region is to thrive, it needs to evolve from a low-cost transit point to a critical node for innovation, production, and resilience. This transformation will require coordinated investment in talent, infrastructure, and policy alignment across borders. The path forward lies in building both national capabilities and regional coherence, in order for ASEAN to play a central role in the age of AI.