KUALA LUMPUR, March 24 — Malaysia will tighten regulations on semiconductor shipments following pressure from the United States to prevent high-end Nvidia chips from reaching China.
Malaysia’s trade minister said Washington has asked the country to monitor the movement of Nvidia’s advanced semiconductors, citing concerns that the chips are being diverted to China in violation of US export restrictions.
“[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” said Investment, Trade and Industry Minister Datuk Seri Tengku Zafrul Aziz, according to the Financial Times.
“They want us to make sure that servers end up in the data centres that they’re supposed to and not suddenly move to another ship,” he added.
Zafrul said he has formed a task force with Communications and Digital Minister Gobind Singh Deo to strengthen oversight of Malaysia’s growing data centre industry, which relies on Nvidia’s high-performance chips.
The United States has imposed export controls on advanced semiconductors and related equipment to curb China’s development of next-generation technologies, including artificial intelligence, which may have military applications.
Concerns over illegal chip flows intensified after Singapore charged three men in a US$390 million (RM1.84 billion) fraud case involving the suspected sale of Nvidia chips through Malaysia to China.
Singaporean authorities said the case involved fraudulent sales of servers from Dell and Supermicro.
Nine people were arrested last month after police raided 22 locations in Singapore.
Prosecutors said they have sought assistance from the United States and Malaysia to track the servers’ movements.
Zafrul said US authorities believe the Nvidia chips passed through Malaysia before reaching China.
However, he added that the investigation has not found evidence that the chips arrived at the Malaysian data centre where they were supposedly delivered.
Malaysia has become a major hub for data centre development, particularly in the southern state of Johor.
Over the past 18 months, the state has attracted more than US$25 billion (RM118 billion) in investments from companies including Nvidia, Microsoft, and ByteDance to build data centres.
Zafrul acknowledged the challenges of tracking semiconductors through global supply chains, which involve multiple parties including chipmakers, suppliers, and distributors.
“The US is also putting a lot of pressure on their own companies to be responsible for making sure they arrive at their rightful destination,” he said.
“Everybody’s been asked to play a role throughout the supply chain,” he added.
“Enforcement might sound easy, but it’s not,” Zafrul said.
