Malaysia is preparing to strengthen semiconductor regulations to curb the unauthorized transfer of chips essential for advancing artificial intelligence to China following mounting pressure from the US.
Malaysia, a rising hub for chip production and data centers, is under scrutiny for potentially channeling Nvidia processors to third countries like China, breaching U.S. export regulations. In response to U.S. pressure, the Malaysian government has declared plans to tighten regulations on Nvidia chip exports.
Malaysia trade minister Zafrul Aziz told the Financial Times the U.S. is urging the country to monitor the flow of high-end Nvidia chips, citing concerns over the redirection of chips to China in violation of export rules. He further revealed the formation of a task force with the digital minister to augment regulations on the expanding data centers, which rely on Nvidia chips.
The U.S. has implemented export restrictions on advanced semiconductors and related equipment to hinder China’s progress in developing next-generation technologies.
The restraint has grown sharper following DeepSeek’s development of advanced AI models. Reports suggest that U.S. officials are also investigating whether the Chinese AI startup obtained Nvidia processors via Singapore, bypassing U.S. restrictions.
Nvidia’s Singapore office contributes nearly 25% of its global sales, sparking concerns in Washington over potential leaks of chips into China. The company clarified that most sales involve invoicing for international firms through Singapore, with minimal chip transfers occurring within the city-state.
Zafrul stated the U.S. authorities suspected Nvidia chips passed through Malaysia en route to China. The investigation uncovered no evidence of the chips delivered to the Malaysian data center claimed to have been sold to.
Around 18% of Nvidia’s revenue comes from customers billed in Singapore, but the company and Singapore’s government report that only 1-2% of revenue stems from actual shipments to the country.
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