In a recent development, it has been reported that the United States President Trump is planning to restrict companies like Nvidia from exporting artificial intelligence (AI) chips to Malaysia and Thailand in an effort to curb semiconductor smuggling activities. Sources familiar with the matter have revealed that the US is concerned about China potentially acquiring advanced chips through intermediaries in these two Southeast Asian countries and is planning to take action to cut off this pathway.
According to insiders who spoke to Bloomberg, this regulatory measure may be implemented concurrently with the withdrawal of the “AI diffusion rule,” a global restriction introduced before the Biden administration stepped down. The aim of the “AI diffusion rule” was to limit semiconductor exports to prevent smuggling and boost the US chip market. However, these restrictions have also faced opposition from US allies and technology companies, including Nvidia.
The Trump administration had promised to reform this policy, with the US Department of Commerce stating back in May that it would replace it with a “bold, inclusive strategy.” However, sources indicate that the draft proposal is not a comprehensive alternative yet. For instance, the draft does not specify the security conditions for the use of US chips in overseas data centers, a debate that is particularly crucial for the Middle East region. It is also unclear whether, apart from Malaysia and Thailand, the Trump administration may eventually impose AI chip export regulations on more countries.
In response to allegations of products being smuggled to China, Nvidia CEO Jensen Huang stated in May this year that there is currently no concrete evidence indicating that AI chips are being transshipped to China. He emphasized that Nvidia’s hardware is large in size and cannot be easily smuggled, adding that customers are well aware of existing regulations and therefore act cautiously to ensure compliance.
Regarding the report on Friday, the US Department of Commerce did not respond to Bloomberg’s request for comment, and spokespersons for the governments of Thailand and Malaysia remained silent. In recent months, US officials have expressed high levels of concern about chips potentially being rerouted to China through Southeast Asia.
Bloomberg has pointed out that with tech companies like Oracle increasing their investments in data centers in Malaysia, chip shipments in the region have significantly surged. Washington has previously warned the Malaysian government to enhance scrutiny, and the Malaysian side has pledged to closely monitor relevant imports.
In June of this year, the Malaysian Ministry of Trade confirmed that a Chinese enterprise in Malaysia is using servers containing Nvidia chips to train large language models (LLM) and stated that they are cooperating with relevant agencies to investigate whether there are any violations of local laws.
Additionally, according to The Wall Street Journal, in early March this year, some Chinese engineers arrived in Malaysia with suitcases full of hard drives with the aim of developing AI systems using servers in local data centers.