Following reports of a Chinese company using Nvidia-powered artificial intelligence (AI) processors for Large Language Model (LLM) training in Malaysia, the Ministry of Investment, Trade and Industry (MITI) is checking with the appropriate authorities to see if any local laws have been broken.
According to MITI, the Malaysian Strategic Trade Act 2010 (STA 2010) does not classify servers that use Nvidia or AI chips as regulated commodities.
"However, Malaysia will cooperate with any government that requires assistance in monitoring trade in sensitive goods under the export control of their respective countries,’ it said.
Businesses, including data centers operating in Malaysia, are free to make their own business decisions as long as they adhere to Malaysian laws and regulations, which are guided by the values of transparency, good governance, and the rule of law, according to MITI.
"The development and regulation of the Malaysian data centre industry and ecosystem is also actively and jointly managed by MITI and the Ministry of Digital through the Data Centre Task Force,” it says.
According to the ministry, Malaysia is vehemently opposed to any person or business that tries to get around export regulations or take part in illegal trading.
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"MITI remains committed to facilitating legitimate trade and fostering a secure and responsible investment and trade environment, ensuring that all technology-related investments and trade align with international best practices as well as with multilaterally agreed commitments,” it said.
Additionally, it emphasized Malaysia's continued commitment to respecting global export control laws and international trade norms.
"MITI will always act firmly against any company operating in Malaysia that violates Malaysian and international trading regulations, including those involved in the semiconductor and AI industries,” it said.
Companies operating here have been encouraged to abide by other nations' unilateral export regulations that apply to their worldwide commercial activities to prevent any secondary sanctions on their enterprises, even though Malaysia maintains a neutral stance on unilateral sanctions, according to MITI.
Coordination between Singapore and the US is under progress as Malaysia completes its internal review. Few chips actually travel through Singapore, where Nvidia recorded around 25 percent of its global revenues in Q3 2024 (mostly as invoice operations for multinational corporations). However, the legal flaws used in this case—passing through shell corporations to access U.S. servers—indicate a more serious problem.
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According to reports, Malaysia has been under pressure from the US government to strengthen regulations and enhance real-time tracking of server and chip shipments. Reports that illegal chips made their way to Chinese AI company DeepSeek through other countries—allegedly through Malaysia—are also being looked at by US authorities.
The involvement of cutting-edge technologies in geopolitical conflict is a developing trend that is highlighted by the Nvidia chip case. Controlled access is a strategic goal for US trade and foreign policy since AI chips are essential to industrial manufacturing, R&D, and defense technology.