The US State Department sent a letter last week to 35 countries warning that joining China's rival AI cooperation bloc is "incompatible" with continued participation in the American Pax Silica initiative. Brazil isn't among the 35 countries receiving the letter — because, as we reported here in July, the country had already picked the Chinese side, never having signed the American pact in the first place.
What changed
According to ITIF, TheNextWeb, and CryptoBriefing, the State Department's letter formalizes an ultimatum: countries that join WAICO (the World AI Cooperation Organization, a Shanghai-based body launched in July with 29 founding members including Brazil, Russia, and South Africa) risk losing access to chip supply-chain co-investment under Pax Silica, the initiative that brings together US allies like Japan, Australia, South Korea, and the UK around minerals, chips, and computing infrastructure. The pressure mechanism isn't just diplomatic: the US has maintained semiconductor and AI chip export controls since 2018, significantly tightened in 2025. Kazakhstan is currently the only country appearing on both membership lists — a sign of how hard it's becoming to straddle both sides.
Why it matters
The divide between the two blocs isn't just rhetorical. WAICO offers open participation, with no values or regime-type test for entry, Chinese open-weight AI models as an alternative to the US-led compute stack, and an AI ethics framework aligned with Chinese standards rather than the OECD, the EU AI Act, or the G7's Hiroshima Process. Pax Silica, on the other hand, controls precisely the physical stack — minerals, chips, infrastructure — using shared investment and coordinated export controls as its alignment tool. That means the geopolitical split could, in practice, become an infrastructure split: who gets access to which chip, which cloud, which model.
The impact for Brazil
Brazil already signaled its position by joining WAICO in July, but that doesn't eliminate the real dependency Brazilian companies have on the US-led supply chain — Nvidia GPUs, American cloud providers, most of the frontier models we've covered here. The practical question for anyone leading AI adoption in Brazil isn't "which side is the country on," but: is my company building dependency on a single geopolitical bloc's infrastructure, with no contingency plan if access changes? Kazakhstan's example shows that trying to straddle both sides is possible, but increasingly rare and increasingly costly.
Entercast's take
We've covered vendor risk here before at the company level — SpaceX's acquisition of Cursor, DeepSeek's repricing. The Pax Silica-WAICO dispute raises that same risk to the geopolitical level: the AI infrastructure your company uses today could become subject to a government decision, not just a vendor's. That's not a call for alarm or immediate migration — it's a call to map, with the same discipline we've already recommended for vendor risk, how much of your company's AI operation depends on a single geopolitical supply chain, and to have at least some clarity on what changes if that access gets more restricted.