Malaysia Investigates Chinese Firm's Alleged AI Chip Export Circumvention

Malaysia's government is actively investigating reports that suggest a Chinese company may be circumventing U.S. export restrictions on high-end AI chips by utilizing servers equipped with Nvidia chips located in the Southeast Asian nation. According to the reports, Chinese engineers traveled to Malaysia in March, carrying hard drives with data intended for building AI models in local data centers using advanced Nvidia chips. The engineers reportedly planned to return these AI models to China, potentially evading U.S. export controls.

The United States has implemented stringent measures to restrict the export of advanced semiconductors to China, including those manufactured by U.S. tech giant Nvidia, in an effort to maintain a competitive edge in technology. In response to these allegations, Malaysia's trade ministry issued a statement on Wednesday, affirming that it is "verifying the matter with relevant agencies to determine if any domestic law or regulation has been breached." The ministry clarified that while servers using Nvidia and AI chips are not classified as controlled goods under Malaysian law, the country is committed to cooperating with any government that requires assistance in monitoring trade in sensitive goods under their respective export controls.

The trade ministry emphasized that data centers in Malaysia are free to make their own commercial decisions but stressed that it is illegal for any person or firm to circumvent export controls. The ministry further stated that it will take firm action against any company operating in Malaysia, including those in the semiconductor and AI industries, that violates Malaysian and international trading regulations.

In response to inquiries about the reports, Beijing asserted that it requires Chinese firms to operate in accordance with local laws and regulations. However, it also expressed opposition to any coercive measures that restrict cooperation with China. A spokesperson for the foreign ministry stated that China is willing to collaborate with countries in the region, including Malaysia, to uphold a free and open international trade order.

In a related development, Singapore charged three individuals with fraud in March, allegedly linked to the transfer of AI-powering Nvidia chips to China. The Singaporean government revealed that servers potentially containing AI-powering Nvidia chips, shipped from the United States to Singapore, had ended up in Malaysia, although their final destination remained unknown. Local reports suggested that these cases were connected to the alleged movement of Nvidia chips from Singapore for use by a Chinese AI firm.

The investigation into these activities underscores the complex landscape of international trade and technology, where countries must navigate the delicate balance between economic cooperation and national security concerns. As Malaysia continues to verify the reports, the outcome of this investigation will have significant implications for the global semiconductor industry and the broader geopolitical dynamics surrounding AI and technology exports.