Key Takeaways
- Distinct regulatory markets are emerging across major jurisdictions: The U.S. pursues deregulation via the AI Action Plan, Europe enforces statutory frameworks through the AI Act, and China emphasizes industry self-regulation with state oversight.
- AI supply chains are beginning to diverge into politically-aligned ecosystems: U.S. retooling of its AI diffusion rule and Beijing’s multilateral approach signal deepening fragmentation, with intensified AI diplomacy expected as both powers seek to expand their technological spheres of influence.
- Middle East and Southeast Asia have become critical theaters for U.S.-China AI competition: These regions’ sovereign AI initiatives and neutral positioning create new vectors for technological influence projection that will determine AI ecosystem adoption in developing markets.
- Corporate restructuring is accelerating as firms prioritize AI capabilities: Tech Giants are conducting mass layoffs in non-AI functions while offering unprecedented compensation to attract top AI talent and investing billions in infrastructure as the race toward AGI intensifies.
- Energy access is now a competitive battlefield for AI firms: With electricity costs rising 20% in major grid regions, Silicon Valley is committing billions to secure long-term power contracts as energy becomes the primary constraint on AI infrastructure expansion.
As the summer nears its end, we see clearer signals on how key governments will support AI development and pursue divergent strategies. The U.S. is pushing deregulation under the Trump administration’s AI Action Plan to accelerate innovation, expand compute infrastructure, and export a unified “American AI stack,”, positioning U.S. vendors for rapid federal procurement wins while downplaying new regulatory frameworks. China is recalibrating industrial policy toward high-quality growth by curbing inefficient data center projects, concentrating capital on semiconductor bottlenecks, and supporting open-source/weight AI model development, which could expand Chinese firms’ share in Global South markets. Europe is doubling down on its risk-based regulatory framework via the EU AI Act and Code of Practice, while investing heavily in compute sovereignty through initiatives like the €20B AI gigafactory plan and national expansions in the UK, France, and Germany. Together, these moves highlight a three-way race: U.S. deregulation and industrial mobilization, China’s consolidation and open-source innovation, and Europe’s governance and sovereignty-driven investments.