US Move to Restrict AI Chip Shipments to Malaysia, Thailand Unlikely to Hinder Data Centre Prospects

The US may restrict AI chip shipments to Malaysia and Thailand, but this is expected to have a limited impact on the construction and utilities sectors due to exemptions and grace periods. MIDF Research maintains a positive stance on these sectors, citing optimism about continued data centre pipelines. Tech giants like Google, Microsoft, and Amazon are not expected to be significantly hindered in exporting advanced AI chips to Malaysia.

The US administration is reportedly planning to restrict AI chip shipments to Malaysia and Thailand, citing concerns about potential re-routing to China. While this move could have geopolitical implications, it is expected to have a limited impact on the construction and utilities sectors due to exemptions and grace periods. MIDF Research maintains a positive stance on these sectors, citing optimism about continued data center pipelines.

The proposed restrictions, detailed by Bloomberg News, would add Malaysia and Thailand to a restricted list to tighten controls on components already banned from sale to China. The draft US Department of Commerce rule would also repeal the Biden-era AI diffusion rule, which had drawn criticism from allies and chipmakers [1].

Tech giants like Google, Microsoft, and Amazon are not expected to be significantly hindered in exporting advanced AI chips to Malaysia. These companies have committed substantial investments in the country's digital infrastructure, with Oracle alone pledging $6.5 billion for its first public cloud region [2]. The proposed restrictions are aimed at preventing China from obtaining these components through intermediaries in Malaysia and Thailand, rather than directly targeting the construction and utilities sectors.

The proposed restrictions highlight the broader geopolitical tensions surrounding AI technology and export controls. Washington officials have debated which countries should be able to import American AI chips and under what conditions. The US aims to redirect supply chains through Southeast Asia, potentially creating a "China Plus One" hub where U.S. firms can bypass Beijing's markets while keeping tabs on smuggling [3].

The proposed AI chip export restrictions include several measures to ease pressure on companies with significant operations in the region. One provision would allow firms headquartered in the US and a few dozen friendly nations to continue shipping AI chips to both countries without seeking a license for a few months after the rule is published [2].

For Malaysia and Thailand, the challenge extends beyond compliance. These nations must now prove they can serve as trusted AI infrastructure hubs while managing the reality that their strategic location makes them attractive conduits for circumventing sanctions. The outcome will likely shape how other Southeast Asian countries approach their own AI development strategies.

The draft regulation remains subject to change, and it is unclear whether Trump officials may ultimately regulate AI chip export restrictions to a wider swath of countries beyond the Malaysia and Thailand additions. The Commerce Department did not respond to Bloomberg’s request for comment on the proposed measures [2].

References:
[1] https://finance.yahoo.com/news/market-chatter-nvidia-risk-us-140425099.html
[2] https://techwireasia.com/2025/07/ai-chip-curbs-malaysia-thailand/
[3] https://www.ainvest.com/news/ai-chip-export-restrictions-goldmine-supply-chain-plays-southeast-asia-2507/