U.S. Pressures Malaysia to Tighten Semiconductor Regulations Amid Concerns Over AI Chip Flow to China

U.S. asks Malaysia to 'monitor every shipment' to close the flow of restricted GPUs to China

Sizable sanction loopholes, sidesteps, and swerves get some attention. Ever since the U.S. government restricted sales of advanced AI and HPC processors to China, Chinese entities have used various loopholes to acquire Nvidia's GPUs. Smuggling GPUs from nearby countries to China was one of the easiest ways to get the desired processors, but it looks like it is not going to be that easy anymore: Singapore is cracking down on at least some smugglers, and now Malaysia is tightening oversight of its high-tech exports to China, reports the Financial Times. Malaysia is reportedly preparing stricter rules for its high-tech sector due to U.S. concerns that advanced processors are being funneled to China, violating American export laws. The United States has asked Malaysia to carefully follow the path of high-performance Nvidia processors entering the country. U.S. officials suspect that many of these chips are being routed to China, bypassing export limits meant to curb Chinese progress in AI and military capabilities. Malaysia formed a task force to tighten oversight, with particular focus on Nvidia hardware used for training of advanced large language models. Malaysia's trade minister, Zafrul Aziz, said the request came directly from Washington. He confirmed that a joint task force, including digital minister Gobind Singh Deo, had been created to strengthen oversight of the local datacenter industry, which depends on Nvidia's hardware. Zafrul explained that the U.S. wants guarantees that the GPUs are installed in the local datacenters and not redirected elsewhere, specifically to China. He said the U.S. is also urging manufacturers and others in the supply chain to share responsibility for ensuring Nvidia processors reach approved destinations. Unlike Singapore, Malaysia is not a major hub of Nvidia GPUs sales, but it looks like the U.S. does not want to give smugglers any chances. Singapore has become increasingly important to Nvidia's global operations, contributing 18.14% of its revenue in the fiscal year 2025. This is a sharp increase from 8.5% in the fiscal year 2024, when major restrictions on selling AI GPUs to Chinese buyers were first implemented. Despite the surge, Nvidia states that most of these Singapore-related transactions involve goods being shipped to destinations other than China. The company explains that its revenue figures are based on the location to which customers are billed, which does not necessarily indicate where the products are ultimately used. Malaysia has recently seen rapid growth in its datacenter industry, especially in Johor state. In the past year and a half, over $25 billion in investment has flowed into the region from companies including Nvidia, Microsoft, and ByteDance.

Malaysia to tighten semiconductor regulations under US pressure, FT reports

March 23 (Reuters) - Malaysia plans to tighten regulations on semiconductors as it comes under U.S. pressure to staunch the flow to China of chips crucial to the development of artificial intelligence, the Financial Times reported on Sunday. Trade Minister Zafrul Aziz said that the U.S. government was demanding Malaysia closely track the movement of high-end Nvidia (NVDA.O), opens new tab chips that enter the country over suspicions that many are ending up in China, according to the report. "[The U.S. is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips," Aziz told the newspaper. "They want us to make sure that servers end up in the data centres that they're supposed to and not suddenly move to another ship." Nvidia did not immediately respond to a Reuters request for comment. The United States is investigating if DeepSeek, whose AI model's performance rocked the tech world in January, has been using banned U.S. chips. Malaysia is currently investigating if local laws were breached in the shipment of servers linked to a Singapore fraud case, as they may have contained advanced chips subject to U.S. export controls. Singapore prosecutors told a court earlier in March that the case in which Singapore-based firms have been accused of fraudulently supplying U.S. servers to Malaysia involves transactions worth $390 million. Singapore media have linked the case to the possible transfer of Nvidia's artificial intelligence chips to Chinese artificial intelligence firm DeepSeek. Reporting by Rishabh Jaiswal in Bengaluru; Editing by Mrigank Dhaniwala Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Technology

Malaysia to crack down on Nvidia chip flows under US pressure

Malaysia is planning to tighten regulations on semiconductors as it comes under US pressure to staunch the illicit flow to China of chips crucial to the development of artificial intelligence. The country's trade minister said Washington was demanding Malaysia closely track the movement of high-end Nvidia chips that enter the country over suspicions that many are ending up in China, in violation of US export rules. He added that he had formed a task force with digital minister Gobind Singh Deo to tighten regulations around Malaysia's burgeoning data centres industry, which relies on chips from industry leader Nvidia. "[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips," Zafrul Aziz told the Financial Times. "They want us to make sure that servers end up in the data centres that they're supposed to and not suddenly move to another ship." The US has imposed export controls on advanced semiconductors and related equipment in an effort to obstruct China's development of next-generation technologies, including AI, which may have military applications. Anxiety in the region over the illicit chip trade has escalated in recent weeks, after Singapore charged three men in a $390mn fraud case related to the suspected sale of Nvidia chips via Malaysia to China. In the final days of Joe Biden's presidency, the US introduced export controls that created a three-tier licensing system for AI chips used in data centres, such as Nvidia's powerful graphics processing units. The system was aimed at hindering Chinese companies' efforts to circumvent US restrictions by accessing the chips via third countries. Nvidia's Singapore office accounts for nearly a quarter of its global sales, raising suspicions in Washington that some of the chips are leaking into China. The company has said almost all of these sales constitute invoicing of international companies through Singapore and very few chips pass through the city-state. Three weeks ago, Singaporean police arrested nine people -- three of whom were charged -- following raids on 22 locations over suspicion of fraudulent sales of servers containing Nvidia chips. Prosecutors said the fraudulent sales included Dell and Supermicro servers. Singapore has requested assistance from the US and Malaysia in investigating the movements of the servers. Zafrul said US authorities believed the Nvidia chips ended up in China after passing through Malaysia. But he said the investigation had turned up no evidence that the chips arrived at the Malaysian data centre to which they were purportedly sold. Malaysia has become one of the fastest-growing markets for data centre development, much of it concentrated in the southern state of Johor. The state has drawn in more than $25bn of investment from the likes of Nvidia, Microsoft and TikTok owner ByteDance in the past 18 months to build data centres, and recently agreed to form a special economic zone with Singapore. Zafrul emphasised the difficulty of tracking semiconductors through global supply chains, which involve chipmakers, suppliers and buyers as well as companies involved in manufacturing and distributing servers. "The US is also putting a lot of pressure on their own companies to be responsible for making sure they arrive at their rightful destination," he said. "Everybody's been asked to play a role throughout the supply chain." He added: "Enforcement might sound easy, but it's not."

US pressures Malaysia to stop banned AI chips potentially entering China by monitoring 'every shipment that comes to Malaysia when it involves Nvidia chips'

The United States has come into 2025 swinging when it comes to foreign imports around technology. Not only has the Trump administration implemented new tariffs that have caused Japanese companies to stockpile on US soil, but has also talked about killing the CHIPs act entirely. Now it seems the US has turned its attention to Malaysia, over concern for tech shipments being redirected from there to China, further bolstering the country's AI development. Reuters reports that regulations around semiconductors in Malaysia are about to be tightened due to US interest. The Financial Times spoke to Trade Minister Zafrul Aziz, who said Malaysia would have to closely track the movement of high-end Nvidia chips at the behest of the United States government. "[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips," Aziz told the newspaper. "They want us to make sure that servers end up in the data centres that they're supposed to and not suddenly move to another ship." It might feel a little out of no where, but Malaysia is currently investigating a Singapore fraud case which may involve a shipment of servers that might have had advanced chips subject to US import laws. The case involves transactions worth $390 million and the local media has linked the case with Chinese-based AI firm DeepSeek. Whether or not the cases are actually linked is still up in the air, but regardless of facts, this grab for control and further crackdowns by the United States is unsurprising. Everyone is worried about the future of AI technology, and the US has appeared especially reactionary with tech tariffs that saw Nvidia loose $200 billion in valuation in a single day. With crucial hardware, such as graphics cards, already seeming impossible to get, stricter trade rules alongside these tariffs spell bad news for PC gamers. The largest lobbying group for gamers in the US has already come out and said the tariffs will negatively impact millions of Americans, while manufacturers like Acer and ASRock have already admitted they're going to raise their prices in response. With greater fear around China's potential misuse of tech, things are likely to get worse before they get better. If we do see Trump's proposed 100% tax on silicon from Taiwan, we might all end up dreaming of the sky-high prices we currently face.

Malaysia to tighten semiconductor regulations under US pressure

Malaysia plans to tighten semiconductor regulations under US pressure to prevent Nvidia chips from reaching China. U.S. officials want Malaysia to monitor Nvidia shipments closely, suspecting that some are ending up in China. Malaysia is also investigating potential breaches linked to a fraud case involving servers and advanced chips.Malaysia plans to tighten regulations on semiconductors as it comes under US pressure to staunch the flow to China of chips crucial to the development of artificial intelligence, the Financial Times reported on Sunday. Trade Minister Zafrul Aziz said that the US government was demanding Malaysia closely track the movement of high-end Nvidia chips that enter the country over suspicions that many are ending up in China, according to the report. "[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips," Aziz told the newspaper. "They want us to make sure that servers end up in the data centres that they're supposed to and not suddenly move to another ship." Nvidia did not immediately respond to a Reuters request for comment. The United States is investigating if DeepSeek, whose AI model's performance rocked the tech world in January, has been using banned US chips. Malaysia is currently investigating if local laws were breached in the shipment of servers linked to a Singapore fraud case, as they may have contained advanced chips subject to US export controls. Singapore prosecutors told a court earlier in March that the case in which Singapore-based firms have been accused of fraudulently supplying US servers to Malaysia involves transactions worth $390 million. Singapore media have linked the case to the possible transfer of Nvidia's artificial intelligence chips to Chinese artificial intelligence firm DeepSeek.

The US Has Reportedly Demanded Malaysia To Patch "Trade Loopholes" That Have Transferred Billions in NVIDIA AI Chips to China

Malaysia is now starting its crackdown on the "trade loopholes," which involve the transfer of NVIDIA's high-end AI chips to China by illegal means. Well, it seems like the current US administration is determined to enforce its export restrictions, particularly involving AI hardware, to the likes of China. While firms like NVIDIA cannot export their high-end AI chips to China directly, they have somehow ended up in the nation, courtesy of the trade loopholes in the US policy, which we'll discuss ahead. One of the countries involved in this tech transfer is Malaysia, but according to The Financial Times, the nation is now taking action against it, devising a task force to monitor the transfer of NVIDIA chips. [The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips. They want us to make sure that servers end up in the data centres that they're supposed to and not suddenly move to another ship. - Trade Minister Zafrul Aziz For those unaware, China has been getting access to NVIDIA's high-end AI chips in plentiful quantities despite the export restrictions, and that is mainly due to the involvement of nations like Singapore and Malaysia. These countries apparently import NVIDIA's high-end AI hardware and then transfer it to China through backdoor means, with the transactions claimed to be worth billions. Recently, three Singaporean individuals were caught selling NVIDIA's AI servers to China, with an estimated worth of $390 million. Malaysia's minister claimed that while the US has accused them of selling chips to China, there is no evidence to support this statement. Moreover, the country itself is one of the biggest investors in AI and has reportedly received investments of up to $25 billion from major tech companies to build up data centers, so it is safe to say that Malaysia itself has a high demand for NVIDIA's AI chips. But the country is accused of being involved with China in illegal trade, but that is being investigated for now. We all know that if these loopholes get patched, NVIDIA's DC revenue could see a hit, given that countries like Singapore account for a decent portion of AI server shipments. While nothing is certain for now, it is evident that the US doesn't want China to get ahead in the AI race, and they will implement every measure possible.

Malaysia Under US Pressure to Monitor Nvidia Shipments as Washington Eyes China Backdoor Routes

Malaysia is reportedly under pressure to enforce stricter restrictions on the transit of Nvidia's semiconductors after the U.S. urged the country to monitor whether the chips are entering China. Concerns over illegal chip trading in the region have grown. In February, three men in Singapore were charged for allegedly selling millions of Nvidia chips sourced from Malaysia to China. Malaysia Under Pressure Investment, Trade and Industry Minister Zafrul Abdul Aziz told the Financial Times that the White House asked Malaysia to monitor imports and exports of Nvidia chips in the country. "They want us to make sure that servers end up in the data centers that they're supposed to and not suddenly move to another ship," he told the publication. Abdul also confirmed the country was forming a task force to tighten regulations surrounding its growing data center industry, which also heavily relies on Nvidia's chips. Over the past few years, the U.S. has imposed strict export controls on advanced equipment to disrupt Chinese advancements in AI and other emerging technologies. Illicit Trade Suspicions are increasing in Washington that China is still receiving AI chips from America's leading AI firms. Nvidia, one of the world's most valuable companies, has almost a quarter of its sales from its Singapore office, which has raised concerns that some were heading to China. The chipmaker claims that almost all of these sales are invoiced from international companies, with most of the chips not entering the country. In February, Singapore charged three men for allegedly selling $390 million worth of Nvidia chips to China, all of which were supplied from Malaysia. The fraudulent sales also included Supermicro and Dell servers, which are also on the banned exports list. Chinese Firms Sidestepping Controls In August 2024, Reuters revealed that State-linked Chinese entities were using U.S. cloud service providers to access banned American AI chips. The publication found that at least 11 Chinese entities attempted to obtain access to U.S. technologies through cloud service providers, including Amazon Web Services (AWS). In a document viewed by Reuters, Shenzhen University was revealed to have spent 200,000 yuan ($28,000) on an AWS account to access Nvidia A100 and H100-powered cloud servers. In a statement to CCN, an Amazon spokesperson said: "AWS complies with all applicable US laws, including trade laws, regarding the provision of AWS services inside and outside of China."