Malaysia, a budding hub for both chip manufacturing and data centers, is coming under scrutiny as a possible funnel for Nvidia processors to third countries, particularly China, in violation of U.S. export controls.
The country’s government now says that it’s planning to tighten regulations over the flow of Nvidia chips, following pressure from the U.S.
The U.S. is asking Malaysia to monitor every shipment of Nvidia chips to the Southeast Asian country, trade minister Zafrul Aziz told the Financial Times in an interview published Monday. Zafrul noted that Washington wants to ensure servers with Nvidia chips go where they are supposed to go, and not “suddenly move to another ship.”
The trade minister added that he’s formed a task force with digital minister Gobind Singh Deo to tighten regulations around Malaysia’s data centers.
Malaysia’s Ministry of Industry, Trade, and Investment did not immediately respond to a request for comment.
The U.S. has imposed strict export controls on the sale of advanced chips, including the Nvidia processors that power the AI boom, to Chinese companies. Yet officials are increasingly concerned that these processors are making their way to China through third countries.
This scrutiny has intensified in the wake of DeepSeek and its powerful and efficient AI models. U.S. officials are reportedly investigating whether the Chinese AI startup got Nvidia processors through Singapore, in spite of U.S. restrictions. (For its part, the Chinese AI startup has disclosed that it acquired Nvidia processors before export controls came into effect)
Recently, Singapore charged three men with fraud for allegedly misleading server suppliers over the identity of final end-users. The transactions involved are worth around $390 million.
Singaporean officials have reiterated that the country is ready to work with any government that suggests that laws have been breached.
About 18% of Nvidia’s revenue is generated by customers using Singapore as a billing location, yet both the company and Singapore’s government note that only about 1-2% of revenue is generated from shipments to the country.
This story was originally featured on Fortune.com
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