Technology

Malaysia under US pressure: Stricter export controls for Nvidia chips planned

Malaysia tightens control over Nvidia chips under US pressure to prevent illegal shipments to China.

Eulerpool News Mar 25, 2025, 10:22 AM

Malaysia will tighten its export controls for high-performance processors after the US raised concerns that advanced Nvidia chips are reaching China via the country – despite existing trade restrictions. Trade Minister Zafrul Aziz confirmed that Washington had asked Malaysia to more closely monitor the supply chains of AI-relevant semiconductor technology.

The focus is particularly on Nvidia graphics units, which are used in data centers for artificial intelligence development. These chips are subject to US export controls intended to prevent China from accessing strategically critical technologies that could potentially be used for military purposes.

The US authorities suspect Malaysian intermediaries of bringing servers with Nvidia chips into the country via data centers, which are later resold or redirected. "The Americans want us to ensure that every Nvidia chip ends up where it is supposed to go—and not suddenly loaded onto another ship," said Zafrul.

As early as the beginning of March, a suspected case of chip diversion was uncovered in Singapore. Nine people were arrested, three of them charged. The judiciary suspects a network behind the $390 million fraud, which allegedly sold Dell and Supermicro servers with Nvidia components from Malaysia to China.

Nvidia, which processes about a quarter of its revenue through its Singapore branch, denies that relevant quantities physically pass through the city-state. Rather, it is mainly invoicing for international customers.

Meanwhile, Malaysia is one of the most dynamic locations for data centers in Southeast Asia. Over the past 18 months, more than $25 billion in investments have flowed into Johor, including from Nvidia, Microsoft, and ByteDance. A special economic zone with Singapore has also been agreed upon in the region.

Zafrul emphasized that Malaysia takes its supervisory duties seriously, but the complexity of global supply chains should not be underestimated. US companies are also under growing pressure to fully document their distribution channels. "Every player along the value chain is challenged – enforcement sounds easier than it is," he said.

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