Malaysia plans to impose stricter regulations on the movement of semiconductors, particularly those from Nvidia, as part of efforts to curb the flow of advanced chips to China under U.S. pressure. The United States has expressed concerns over the potential diversion of these critical chips to China, where they could be used in the development of artificial intelligence (AI) technologies.
Trade Minister Zafrul Aziz revealed that the U.S. government has asked Malaysia to monitor shipments of high-end Nvidia chips and ensure that they are not diverted to unauthorized destinations, particularly China. The U.S. is concerned that servers containing these chips may end up in Chinese data centers instead of the intended locations, and is pushing Malaysia to track every shipment of Nvidia products entering the country.
Malaysia’s investigation into the situation also ties into a broader inquiry regarding a fraudulent transaction case in Singapore, involving the illicit shipment of U.S. servers to Malaysia. These servers may have contained advanced chips covered by U.S. export controls. The case, which involves Singapore-based firms accused of supplying these servers fraudulently, is valued at $390 million. There are concerns that the shipments may have been intended for Chinese AI company DeepSeek, which gained attention for its AI model performance earlier this year.
The U.S. government is also probing whether DeepSeek has been using banned U.S. chips, as part of a wider investigation into the potential violations of export controls on semiconductor technologies.