Sea Ltd. partners with OpenAI as Chinese AI firms push deeper into Southeast Asia

Chinese artificial intelligence companies are rapidly expanding across Southeast Asia, deploying open-source models and building data center infrastructure at a pace that is reshaping the region's technology landscape and challenging the dominance of American rivals.

The Open-Source Strategy

The advance is driven by a combination of cost efficiency and accessibility. Alibaba ↘ 1.89%, DeepSeek, and Huawei are offering AI tools at a fraction of the price of US alternatives, with Chinese open-source large language models now accounting for roughly one-third of global LLM usage, up from virtually nothing in late 2024. DeepSeek's latest V4 model, built on Huawei's Ascend chips, and Alibaba's Qwen 3.5 are already being deployed by enterprises across the region — Singapore's OCBC bank runs over 30 internal tools on DeepSeek and Qwen, and Indonesia's Indosat has built directly on DeepSeek's architecture.fortune+1

"All AI start-ups have an international strategy from day one in China, and Southeast Asia is top of the list," Cindy Chow, CEO of the Alibaba Hong Kong Entrepreneurs Fund, told Fortune. Southeast Asian conglomerates "believe that the region won't catch up in AI development on their own, and that accessing advancements from China is key to staying competitive," she added.fortune

Alibaba Cloud launched a new public cloud region in Johor, Malaysia, earlier this month with two data centers, bringing its total Malaysian footprint to five facilities — its largest in Southeast Asia — as part of a $53 billion global infrastructure plan.malaysian-business.com+1

Diverging National Responses

The region's governments are navigating the influx with varying strategies. Singapore has pursued a dual-ecosystem approach, awarding data center contracts to both American and Chinese firms and collaborating with Alibaba Cloud on the Qwen-SEA-LION language model tailored for Southeast Asian languages. As Singapore prepares to chair ASEAN, expanding AI adoption across the bloc is a stated priority.thestar+1

Indonesia, by contrast, faces what analysts describe as a policy vacuum. Its long-awaited AI presidential regulation was pushed back repeatedly and remains pending President Prabowo Subianto's approval, according to a draft seen by Reuters. The country needs an estimated $3.2 billion by 2030 to meet national computing needs, with a proposed Sovereign AI Fund managed by wealth fund Danantara Indonesia still years from realization.reuters+2

Malaysia has positioned itself between the two superpowers, offering tax incentives of up to zero percent in special economic zones while requiring trade permits for advanced AI chip exports. The country has attracted both Microsoft ↗ 1.62% and Alibaba as major investors.Modern Diplomacy+1

A Broader Geopolitical Contest

The expansion reflects what Fortune characterized as China's broader strategy of "industrializing the use of AI" rather than competing head-on at the frontier research level. Chinese firms, constrained by US chip export controls and a smaller domestic revenue pool, have become what industry observers call "skinny athletes" — lean, efficient, and oriented toward global markets. In January, a China-ASEAN AI Application Cooperation Center was inaugurated, and a ministerial cooperation mechanism on AI was proposed.english.ciste.org.cn+1

Yet American firms are not ceding the field. Sea Ltd, the Singapore-based technology company, announced Monday a new strategic partnership with OpenAI to expand AI adoption across Southeast Asia. The contest between Chinese accessibility and American capability is likely to define the region's digital future for years to come.china.org.cn