Southeast Asia AI boom at risk as region lags behind hardware powerhouses, Standard Chartered warns

Southeast Asia AI boom is slipping as the region remains entrenched in low‑value manufacturing, warned Edward Lee, Standard Chartered’s chief economist for ASEAN.

Southeast Asia AI boom and the value‑chain gap

Lee notes that the bloc supplies only 6% of global intermediate goods, versus 15% for China. While Taiwan’s TSMC posted a ↑ 77% quarterly profit surge to NT$707 billion ($22 bn) (Reuters), Singapore and Malaysia are limited to chip packaging and server assembly.

“Every nation dreams of a Silicon Valley, but throwing cash at the sector does not guarantee success,” Lee said.

Singapore has pledged S$1 billion ($776 m) for AI research (Bloomberg), yet Lee cautions that R&D costs are steep.

Countries such as Vietnam and Malaysia may capture rising electronics orders, whereas the Philippines’ BPO‑driven economy could feel pressure as AI automates routine services.

Standard Chartered trimmed its 2026 global growth outlook to ↓ 3.0%, citing lingering Middle‑East supply shocks that could hit commodity‑importing economies like India, Thailand and the Philippines.

Lee concludes that geopolitical risk now shapes supply‑chain decisions as much as cost efficiency.