We dive into the costs of strict data sovereignty mandates in Southeast Asia and get a snapshot of Japan’s thriving AI ecosystem.
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IN FOCUS

  • Things to consider for data sovereignty mandates
  • Japan's enterprise-leaning AI landscape
  • The decline of SK hynix's shares after its financial debut

Hello reader,

The Philippine government is already working on policies and legislation to make sure that data generated within the country stays in the country. Some argue, however, that such policies and legislation should've come out some years ago.

Still, there has been some urgency in this regard, with experts saying that stricter data localization mandates could attract more global hyperscalers - like AWS, Microsoft, and Google - to build more local facilities and boost foreign investment.

Building a digital wall around your data comes with its own set of challenges, though.

In March, Iranian drone strikes knocked out facilities in the United Arab Emirates (UAE) and Bahrain. Because both countries have strict policies keeping sensitive government data onshore, the destruction of these sites disrupted several web services, including basic business registrations, for weeks.

This concern over war-related destruction also pushed Ukraine to repeal a data sovereignty law in 2022.

Yet, momentum toward localization remains fierce. Those in favor of stricter laws argue that clear residency rules give investors the regulatory certainty they need to commit hundreds of millions of dollars to local builds.

For this, balance is key, and my colleague Scott goes deeper into what this balance can look like in this edition's featured story.

Miguel Cordon, journalist


TOP STORY

SEA's data laws chase investments, but will they protect data?

Governments are rushing to pass data sovereignty laws, but there are still global hardware bottlenecks to consider. Of course, data centers are very costly to set up.

Mandating that hyperscalers process and store data locally demands infrastructure that's hard to secure. Nvidia, for example, already has a US$1 trillion order backlog stretching all the way through 2027.

This means that while governments like the Philippines can set up the laws for local computing today, the effects will only be felt years down the line.


A VISUAL STORY YOU SHOULDN'T MISS

Mapping the AI startups making waves in Japan

Most of the active AI startups in the country focus on enterprise AI, as shown by Tech in Asia data. One of the biggest names here is Preferred Networks, a startup focused on research and development of deep learning systems.

Just last month, the company also introduced a model catering to the Japanese language, which it priced at half the cost of comparative models from companies like OpenAI.

But it's not all giants and OpenAI competitors in the country. The space has also been friendly to newcomers, with 10 of the latest deals Tech in Asia has tracked being for companies below the series A stage.


TRENDING NEWS

1️⃣ SK hynix falls 4.4% after Nasdaq debut

The decline followed the company's US$26.5 billion US share sale, when its American depositary receipts surged 12.8% on debut. SK hynix plans to use the capital from the offering to fund new factories and equipment.

2️⃣ OpenAI tightens access to advanced AI models

The AI giant will require members of its Trusted Access for Cyber program to enable hardware-backed passkeys by September 1 to maintain access to its most advanced frontier models. Users who fail to comply with the new security mandate will be downgraded to default model access levels.

3️⃣ Indian tech firm LTM partners with Anthropic

The partnership will link the Claude AI suite into LTM's BlueVerse AI Delivery Fabric offering for tasks like AI software engineering, application modernization, and site reliability engineering. The deal forms part of Anthropic's broader enterprise push via a US$100 million partner program.

4️⃣ Chinese logistics firm Neolix eyes Saudi expansion

The company has reportedly deployed more than 25,000 RoboVans across 15 countries. Recently, it secured the UAE's first operational license via a partnership with Abu Dhabi's K2 Group.

5️⃣ Temasek-backed Seviora closes $400m investment fund

The investment vehicle combines Churchill's US private market investment capabilities with Seviora's Asian private credit and global fund-of-funds businesses. Seviora had US$75 billion in assets under management as of December 31, 2025.


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