By: Siddharth Yadav
The following excerpt is from Chapter 5 — Global AI: A Story of Fragmentation of ORF Global Quarterly: Energy and Tech: Powering the Future.
The inaugural issue of this series identified the rapid, fragmented growth of artificial intelligence (AI) as a megatrend for 2026. This article revisits that trend at the year’s midpoint to examine how it has unfolded across the AI stack, and the challenge it poses for the Global South. The layers that require significant amounts of capital and expertise—frontier research, compute, and the investment that sustains them—have become increasingly concentrated in a handful of jurisdictions. Meanwhile, the user-facing layer has dispersed widely across the Global South. Global corporate AI investment reached US$581.7 billion in 2025, more than double the previous year’s total, with most of it flowing to the economies that already dominate research and hardware. This creates a structural vulnerability for countries outside the core. Economies with nascent domestic digital infrastructure, investment vehicles, research ecosystems, and governance frameworks risk being marginalised by the AI-driven future.
That concentration has a distinct geography. Frontier model development, chip design, and cutting-edge research remain concentrated in the United States (US); sovereign capital, energy, and connectivity corridors in the Gulf; and talent and advanced manufacturing in Asia, particularly China. Beneath these are a series of niche chokepoints—from leading-edge fabrication to specialist materials—controlled by a small number of actors elsewhere. In response, countries across the Global South have sought to build domestic capacity in selected layers of the stack. However, these efforts remain sub-frontier in scope, and no single country has pursued the entire value chain.
Yet concentration characterises only the supply side. Demand is moving in the opposite direction, reflecting the shift towards diffusion and use cases identified in the inaugural issue of this publication. The largest and fastest-growing user bases for frontier systems are now found in India, Indonesia, Brazil, Nigeria, and neighbouring markets. It is here that the region’s leverage—substantial but largely unrealised—is accumulating.
AI adoption is accelerating across the Global South, but the research, compute and investment that underpin frontier AI remain concentrated in a handful of countries. Closing that gap will require more than access—it will require building long-term capability. Learn more in ORF Global Quarterly: Energy and Tech: Powering the Future.