Asian technology firms are facing a “costly paradox” as they try to navigate an increasingly uneven global AI rule book, with divergent compliance requirements in the European Union and the United States threatening to blunt their competitive edge.

Analysts say the challenge is acute for Asian companies. While the EU has a single, comprehensive and legally binding artificial intelligence framework based on the landmark EU AI Act, US technology-related laws are decentralised at the state level.

For firms building AI systems, compliance with regulations is essential to earning consumer trust, avoiding potentially crippling penalties and ensuring they can continue operating in two of the world’s largest consumer markets.

Asian firms embedded in the global AI ecosystem face dual costs to comply with different EU and US rules, according to Martyna Sucharzewska, a senior technology analyst at BMI, a unit of Fitch Solutions.

“Organisations operating across both jurisdictions must build parallel compliance architectures, and the cost of doing so is not trivial,” she said.

The implications are significant because Asian tech firms play critical roles in the AI space, ranging from semiconductor and memory chips makers from Taiwan and South Korea to cloud infrastructure developers.