Asia’s AI playbook gets a reality check as the Iran war sends energy prices higher and snarls supply chains

The global AI boom has bolstered economic fortunes across Asia, lifting Korean chipmakers, Southeast Asian data center operators, Chinese AI startups and Japanese component-makers alike.

Even the worst Middle Eastern conflict in decades isn’t slowing things down. This week, Microsoft promised to invest $5.5 billion in cloud and AI infrastructure in Singapore, and an additional $1 billion into Thailand over the next few years.

But the Iran war may ultimately force Asia to revisit its AI playbook, following a surge in energy prices and shortages of the key inputs needed to build AI infrastructure.

“The scaling laws that have driven the AI boom are fundamentally peacetime constructs, which were discovered in an era of abundant energy and expanding chip supply, and operate on an implicit assumption: that energy elasticity is unbounded,” Wei Lu, a professor at the College of Computing and Data Science at Singapore’s Nanyang Technological University (NTU), explains. That’s led to what he deems a “brute force aesthetic,” where larger and more capable models are developed even as the energy per unit of compute keeps rising.

That’s tolerable when times are good; it’s less so when supplies are........

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