US ultimatum to 35 nations splits global AI supply chains

Washington is forcing a binary choice in AI cooperation, threatening to cut off countries that straddle both US and Chinese frameworks.

The US State Department is preparing letters to 35 countries demanding they choose between Washington and Beijing in the AI race, threatening exclusion from US-led supply chains for those joining China's rival framework.

"It is difficult to imagine how a country can reliably position itself as a trusted partner in one technological ecosystem while simultaneously signing onto an initiative developed by China to advance a competing vision of artificial intelligence," a US government official told Reuters on condition of anonymity.

The draft letter targets signatories of the AI Opportunity Statement signed in June, which includes participants in the Pax Silica framework — a US-led initiative launched last year with more than 20 economies including Japan, South Korea, Australia and the European Union. China's World AI Cooperation Organization, launched by President Xi Jinping in July, counts 29 founding members including Russia, Brazil and South Africa.

Kazakhstan, a major supplier of critical minerals essential to AI hardware, is the only country confirmed to hold membership in both frameworks, raising alarm in Washington. The letter states that "participating in everything is the same as participating in nothing," and warns that signing the Pax Silica declaration "is not merely a membership registration but a commitment."

Two frameworks, one choice

The Pax Silica framework, launched late last year, aims to secure supply chains for semiconductors, critical minerals and AI models through joint projects and export controls with allies and resource-rich nations. The initiative is designed to reduce dependence on China for critical inputs. China's World AI Cooperation Organization, established in Shanghai in July, promotes open-weight AI models as an alternative to proprietary systems from US companies such as OpenAI and Anthropic.

Kazakhstan's dual membership has become the flashpoint. The Central Asian nation was welcomed by Washington in June as the first country in the region to join Pax Silica, but subsequently also signed onto the China-led organization. Kazakhstan controls significant reserves of critical minerals used in advanced technology manufacturing.

Supply chain stakes

The US move reflects a broader strategy to exclude China from critical mineral and semiconductor supply chains while maintaining leadership in advanced AI development. China has used its near-monopoly supply power over critical minerals as a retaliatory tool in the tariff war launched by President Trump last year. In response, the US has been strengthening domestic procurement and sourcing from allies.

China is also reportedly considering restricting foreign access to its major AI models on national security grounds, further heightening tensions. Chinese open-weight models have rapidly narrowed the gap with proprietary US systems, intensifying the competition over which country will shape global AI standards and infrastructure.

The letter's dispatch timing remains unclear and it may be revised before sending. The State Department declined to comment on what it called "allegedly leaked internal documents." The Chinese Embassy in Washington said such steps would only hinder the global development of AI and serve no one's interests. The Kazakh embassy has not responded to requests for comment.

The forced choice places emerging economies and resource-rich nations in a difficult position, both diplomatically and economically. Countries that have sought to maintain relations with both camps now face potential exclusion from US-led investment opportunities in AI-related projects if they remain in China's framework. For semiconductor manufacturers and AI companies with dual-market exposure, the fragmentation of supply chains could create regulatory uncertainty and revenue risk across both spheres.

This article is for informational purposes only and does not constitute investment advice.