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Malaysia Investigates Chinese Firm’s Use of Nvidia AI Chips Amid Export Controls

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Malaysia’s trade ministry is currently investigating reports that a Chinese company operating in the country is using Nvidia AI chips and servers for training large language models, according to a ministry statement on Wednesday. The inquiry aims to determine if any domestic laws or regulations have been violated.

The Wall Street Journal previously reported that Chinese engineers arrived in Malaysia in early March carrying suitcases filled with hard drives. They were reportedly working to develop AI models using data centers equipped with Nvidia chips.

These developments come against the backdrop of U.S. restrictions on exports of advanced AI chips, introduced during the Biden administration, which capped the number of AI chips Malaysia could receive. Though the Trump administration later rescinded these curbs, it issued guidance emphasizing licensing requirements if AI chip use is linked to weapons of mass destruction.

Malaysia’s ongoing verification reflects growing global scrutiny over technology transfer and AI development involving Chinese entities.

Malaysia Plans 50% Increase in Gas-Fired Power Capacity to Support Booming Data Centre Demand

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Malaysia aims to expand its gas-fired power capacity by 6 to 8 gigawatts by 2030 to meet soaring electricity demand driven largely by the rapid growth of data centres, an industry official said. This expansion would represent a 40-54% increase from the current 15 GW of gas capacity, as the country seeks to reduce reliance on coal.

According to Megat Jalaluddin, CEO of state utility Tenaga Nasional Berhad, the government plans to build new gas plants and extend the lifespan of existing ones, positioning gas as the key transitional fuel after coal. Total electricity consumption in Malaysia is projected to rise by 30% by 2030.

Malaysia is expected to see the fastest growth in data centre power demand in Southeast Asia, with data centres’ share of electricity consumption in the region forecasted to triple to 21% by 2027 from 7% in 2022, based on a May report by Bain & Co, Google, and Temasek.

Petronas, Malaysia’s LNG exporter, may start importing liquefied natural gas within four to five years due to rising gas demand. The country also targets adding up to 10 GW of renewable energy capacity by 2030, more than doubling its current 9 GW, as data centres push for greener energy sources.

Deputy Prime Minister Fadillah Yusof highlighted that data centres will require 19.5 GW of power generation by 2035, making up 52% of Peninsular Malaysia’s electricity use, up sharply from about 2% today.

Malaysia’s southern state of Johor has become a leading data centre hub in Southeast Asia, favored for its proximity to Singapore, affordable land and power, and faster regulatory approvals. Tech giants like Microsoft, Nvidia, Google, and ByteDance have committed billions in investments since early 2024, fueling an infrastructure boom.

Malaysia Denies Government Role in AI Project Involving Huawei Ascend Chips

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Malaysia’s Ministry of Investment, Trade and Industry (MITI) has officially clarified that the government is not involved in a reported artificial intelligence project using Huawei’s Ascend chips, distancing itself from earlier reports suggesting official backing.

The clarification follows local media coverage on Monday that claimed Malaysian firm Skyvast Corporation would deploy Huawei’s Ascend AI chips in a domestic initiative. In response, MITI stated the project “was not developed, endorsed, or coordinated by the Government of Malaysia, nor does it form part of any Government-to-Government agreement or nationally mandated technology programme.”

Huawei, for its part, told Reuters that it has not sold any Ascend chips in Malaysia, and that the Malaysian government has made no such purchases. The Chinese tech giant developed the Ascend line after being cut off from U.S. suppliers, positioning the chips as domestic alternatives amid Washington’s escalating export restrictions on advanced semiconductors, particularly from Nvidia.

The Malaysian ministry also reaffirmed its commitment to complying with international export control laws, national security regulations, and guidance from global regulatory bodies. The statement appears aimed at avoiding diplomatic friction amid growing U.S. scrutiny over AI-related tech flows involving China.

Skyvast Corporation has not responded to requests for comment.

The backtracking highlights the sensitivity of semiconductor and AI technology partnerships in the current geopolitical climate, especially as countries weigh alignment with U.S.-led technology sanctions while maintaining ties with Chinese tech firms.