Tech in 2026: AI Investment, Regulatory Impacts and Supply Chain Resilience
WHAT YOU NEED TO KNOW
- The Indo-Pacific enters 2026 amid intensifying trade and regulatory shifts. The technology prosperity deals the United States negotiated with Japan and Korea along with new rare earth partnerships across Southeast Asia aim to build resilience in advanced technology supply chains. Yet, the outcome of the U.S. Section 232 semiconductor investigation could disrupt momentum. U.S. tariffs could reshape global production networks and complicate cooperation with key partners.
- Online safety regulation is gathering pace as governments move from reactive takedowns to proactive platform governance. Australia’s ban on social media for minors has spurred similar moves in Singapore, Indonesia and Malaysia. The new frameworks emphasize age assurance, transparency and platform accountability, creating both compliance risks and openings for companies to shape safer, youth-focused digital spaces.
- Cybersecurity, data infrastructure and digital consumer protection are core priorities in Asia’s 2026 regulatory agenda. Governments are tightening cyber and data-center rules while expanding scrutiny of artificial intelligence (AI)-driven dark patterns, reflecting a focus on accountability and trust. The region is moving toward stricter enforcement and greater transparency in the digital ecosystem.
ON THE HORIZON
- India’s AI Impact Summit, set for February 19-20, 2026, will be a key moment for global and regional dialogue on responsible AI. The summit aims to position India as a leader in trusted and inclusive AI. The Philippines, as chair of the Association of Southeast Asian Nations (ASEAN) in 2026, is expected to highlight AI governance and digital cooperation as part of its agenda. The president reaffirmed support for a common ASEAN framework on responsible AI anchored in inclusivity, sustainability and competitiveness. AI is poised to feature prominently in the Philippines’ digital priorities, reflecting Asia’s growing influence in shaping region-led, responsible AI and digital governance.
- The delayed ASEAN Digital Economy Framework Agreement (DEFA) is expected to be signed in 2026. DEFA will set forward-looking rules for cross-border data flows, digital trade, e-commerce, digital payments and digital identity. The agreement aims to build a more seamless and trusted regional digital marketplace, enabling businesses to innovate and expand across borders with greater certainty and interoperability.
Sector Overview and Forecast
Macrotrend Monitor
Section 232 Investigations and Semiconductors
The latter half of 2025 saw a marked acceleration in technology-focused trade agreements and strategic partnerships driven by the United States across the Indo-Pacific, in contrast to the disruptive agenda the administration of U.S. President Donald Trump deployed in the first half of the year. In October, building on the trade deals with countries that included provisions on the digital economy, the United States finalized technology prosperity deals with Japan and Korea to align industrial policy and regulatory standards among the United States, Japan and Korea, with the explicit aim of strengthening supply chains for advanced technology components. The deals follow significant public sector-organized private investment, with Japanese firms pledging up to $550 billion in U.S. investments and Korea reaffirming its $350 billion commitment, alongside major U.S. commercial investments across Asia. The United States also established rare earth element supply chain partnerships with Japan, Malaysia, Thailand and Australia, signaling a broader push for resilience and diversification away from China across the technology supply chain.
Looking ahead, the ongoing U.S. Section 232 investigation into semiconductor imports is poised to shape the next phase of tech trade policy. Should the investigation conclude that foreign semiconductor imports threaten its national security, the United States may impose new tariffs or restrictions, further incentivizing domestic manufacturing and reshaping global supply chains. Such tariffs would significantly and negatively impact U.S.-China trade negotiations under the recently announced framework agreement in addition to U.S. collaboration with Taiwan, Japan, Korea and Malaysia. However, recent diplomatic overtures, including easing certain semiconductor restrictions, to reach that framework agreement with China suggest that a more nuanced approach will emerge.
A more collaborative approach will help continue the trend of regulatory harmonization with key allies on global AI standards, encourage trade and investment promotion and increase opportunities for advanced technology research collaboration. Investors should look to the February AI Summit in India as a major signpost following any announcement of the Section 232 investigation outcomes.
Online Safety Regulations Gathering Pace
The first half of 2026 is set to feature rapid acceleration in online safety regulation across the Indo-Pacific and globally, with governments enacting increasingly stringent frameworks to protect children and address digital harms. Australia, the European Union and the United Kingdom continue to set the pace with landmark legislation such as the Social Media Minimum Age Act, the Digital Services Act and the Online Safety Act, respectively. These models are prompting policy contagion as regulators in the Indo-Pacific emulate or selectively adopt similar provisions. The regulatory landscape is shifting from reactive content takedowns to proactive platform safety, with a marked emphasis on age assurance, platform liability and transparency. However, the effectiveness of these laws remains under scrutiny as users seek ways to circumvent restrictions, raising questions about the real-world impact of regulatory interventions.
For technology companies, the evolving definitions of regulated platforms, exemptions and digital duty of care present both compliance challenges and advocacy opportunities. The region’s regulatory regimes are increasingly varied in their legal definitions. Age-verification mechanisms, mandatory risk assessments and rapid content-takedown requirements are increasing. At the same time, there is a growing opportunity to shape youth-centric digital communities by prioritizing child safety and ethical AI. Looking ahead, technology sector leaders should anticipate heightened scrutiny and regulatory obligations, particularly in markets like Australia, Indonesia, Malaysia, Thailand and Vietnam. Global platforms are advised to closely monitor legislative developments, conduct local impact assessments and enhance safety features tailored to national priorities.
Subsector Highlight
Tightening the Cybersecurity Regime
The cybersecurity environment is entering a new phase of regulatory tightening in 2026. After several years of capacity building and voluntary standards, governments are now shifting toward direct enforcement and measurable accountability. Breach reporting, service-provider licensing and real-time disclosure are becoming legal obligations rather than recommendations. The next stage of regulation will focus on the protection of critical digital infrastructure, elevating cyber incidents to national security risks and formalizing board-level liability for failures in oversight and response.
This shift is also intertwined with Asia’s growing emphasis on digital sovereignty. The exposure of UNC3886, a state-linked espionage group that exploited virtualization software to infiltrate networks, illustrates how vulnerabilities in trusted technologies can undermine entire sectors. Across the region, governments are tightening vendor-assurance frameworks, reassessing supply chain dependencies and setting new standards for trusted cloud and data infrastructure providers. Cybersecurity policy is increasingly becoming a core instrument of industrial and national security strategy, where the right to operate hinges on the ability to demonstrate technological trustworthiness.
At the same time, the expanding threat environment driven by AI and emerging technologies is pushing policymakers to rethink resilience. Governments are moving to integrate AI model integrity, algorithmic transparency and deepfake detection into cybersecurity and digital trust governance. Quantum-safe encryption standards and cryptographic migration plans are also gaining prominence. These developments signal a fundamental redefinition of cybersecurity: from defending networks to ensuring the verifiability and control of critical algorithms and data assets.
Regional coordination is expected to deepen as the scale and sophistication of attacks outpace national boundaries. ASEAN and its partners are working toward interoperable reporting protocols and shared threat-intelligence exchanges, recognizing that a coordinated response will be key to managing systemic risks. Yet, even as cooperation strengthens, domestic enforcement will harden. Regulators are expanding investigative powers, imposing fines for concealment and demanding verifiable evidence of resilience from critical operators. The horizon for 2026 points to a more assertive, sovereignty-centered, and enforcement-driven cybersecurity order across the Indo-Pacific — one defined by accountability, trusted technology and the hardening of digital infrastructure.
Regulatory Action on Dark Patterns on the Rise
Dark patterns (digital interface design tactics that manipulate user behavior) are poised to be front of mind for market regulators in the first half of 2026. This is particularly true as AI-driven adaptive, personalized interfaces supercharge these patterns at scale. Governments are already responding unevenly: the EU embeds dark pattern restrictions in its Digital Services Act and broader online fairness rules. In the Indo-Pacific, competition authorities are taking the lead. Singapore’s Competition and Consumer Commission has issued guidelines targeting deceptive design practices and Malaysia’s Competition Commission has finalized a market review of the digital economy ecosystem highlighting dark patterns as an area of concern. The Korea Fair Trade Commission and India’s Competition Commission are actively investigating platforms for exploitative user interfaces. These early signs of diverging approaches signal that the compliance landscape will vary depending on the enforcement stakeholders.
Regulatory scrutiny will likely intensify as policymakers link dark patterns to consumer harm, data protection and ethical AI. In Australia, India, Japan, Malaysia, Korea and Singapore, regulators have begun reviews of online platforms by their respective competition watchdogs. Upcoming platform legislation in these jurisdictions, like the implementation of India’s Digital Personal Data Protection Act, will incorporate redressal mechanisms for dark patterns in online platforms. Businesses should prepare for design audits and potential penalties across multiple jurisdictions as regulatory attention intensifies.
Data Center Growth Continues
The Indo-Pacific data center sector is set for strong growth in early 2026, fueled by demand for AI, cloud services and the digital transformation. India, Indonesia, Thailand and the Philippines are expanding quickly, helped by government incentives, infrastructure upgrades and a young workforce. Meanwhile, Singapore, Malaysia and Japan are strengthening their roles as regional hubs, offering clear regulations and advanced infrastructure, but they also face rising pressure on land, energy and water, driving innovation in design and sustainability.
For the first half of 2026, energy sourcing, sustainability and government incentives will continue to shape investment strategies. Most countries have ambitious renewable energy goals, but fossil fuels still dominate, and grid modernization is uneven. Power purchase agreements and direct renewable sourcing are becoming more common in the region, though regulatory complexity and infrastructure bottlenecks continue to slow progress. Water scarcity and urban congestion are pushing operators to build more resource-efficient facilities and diversify locations. Governments increasingly see data centers as critical infrastructure, but policy uncertainty and slow permitting continue to delay projects. Operators that lead in grid reliability, sustainability and local engagement will be best positioned for growth. Overall, the Indo-Pacific data center market in the first half of 2026 will be shaped by digital demand, energy transition and evolving regulations. Investors and operators should expect more scrutiny on environmental impact, tougher competition for renewable energy and a premium on operational resilience. Strategic priorities include mapping regulatory environments, investing in energy and water efficiency and building flexible engagement strategies with governments
We will continue to keep you updated on technology developments as they occur. If you have comments or questions, please contact BGA Technology Senior Director William Heidlage, Director Apoorva Kolluru, Director Heidi Mah or Associate Harris Amjad.
Best regards,
BGA Technology Team
