South Korea, UAE Tipped as Top AI Contenders Outside US and China, BofA Says

South Korea and the United Arab Emirates are emerging as the strongest contenders in the global artificial intelligence race behind the dominant United States and China, according to a new report from Bank of America. The analysis identifies a select group of nations poised to capture significant growth by specializing in key areas of the AI ecosystem rather than challenging the two leaders directly.

U.S. and China Dominate, Others Specialize

The global AI landscape is increasingly concentrated around the U.S. and China, Bank of America (BofA) analysts noted. The report states that Washington maintains its lead through private investment, advanced chips, and computing infrastructure, while Beijing leverages its manufacturing scale, lower energy costs, and a dominant position in processed critical minerals.

Other economies are strategically positioning themselves to benefit from this dynamic. Their focus is on capturing AI-driven growth through critical roles in semiconductor supply chains, significant data-center investment, and fostering the broad adoption of AI technologies across their economies.

South Korea and UAE Lead the Pack

Among the nations outside the two superpowers, BofA identified South Korea as the strongest overall AI contender for both the short and long term. The country's top position is supported by its combination of semiconductor manufacturing exposure, rapidly expanding AI adoption, supportive government policies, and an ability to translate AI deployment into long-term productivity gains.

The United Arab Emirates was also highlighted as a leading contender, propelled by heavy government investment, abundant energy resources, and one of the world's highest AI adoption rates. However, the report cautioned that geopolitical risks remain a key uncertainty for the nation. A strong second tier of AI leaders identified in the report includes Canada, Germany, Israel, the Netherlands, Singapore, Switzerland, and the United Kingdom.

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Emerging Challengers and Infrastructure Plays

In emerging markets, the report points to India as the clearest long-term challenger. While currently lacking a major semiconductor manufacturing base, India is already one of the largest markets for AI adoption, with diffusion levels comparable to several advanced economies, according to BofA.

Several other countries were identified as near-term beneficiaries of the global AI infrastructure build-out:

• Taiwan, Australia, and Japan are well-positioned due to their importance in semiconductor manufacturing, critical minerals, and data-center supply chains.
• However, BofA noted these countries still face challenges in converting their supply-chain advantages into broader, economy-wide productivity improvements.

The BofA report also emphasized that abundant and reliable energy is becoming a crucial competitive advantage in AI, giving countries like Canada, France, and the UAE a strategic edge as data-center capacity continues to expand.