Malaysia tightens export controls on US-origin AI chips amid tariff talks with Washington

[KUALA LUMPUR] Malaysia has announced immediate restrictions on the export, transhipment, and transit of high-performance artificial intelligence (AI) chips originating from the United States, a move aimed at closing regulatory gaps and safeguarding against potential misuse of sensitive technologies.

The Ministry of Investment, Trade and Industry (MITI) said Monday (Jul 14) that all such transactions involving US-origin AI chips will now require a Strategic Trade Permit under Section 12 of the Strategic Trade Act 2010 (STA 2010).

The provision – known as the “Catch-All Control” – mandates individuals or companies to notify authorities at least 30 days before engaging in the export or movement of items not listed in the Strategic Items List (SIL) but suspected to be at risk of being diverted to illicit or restricted use.

“This initiative serves to close regulatory gaps while Malaysia undertakes further review on the inclusion of high-performance AI chips of US origin into the SIL of the STA 2010,” MITI said.

Tariff talks

The announcement comes as Malaysia remains in discussions with Washington over a proposed 25 per cent reciprocal tariff on US-bound Malaysian exports, slated to take effect on Aug 1. The transhipment of high-performance AI chips has emerged as one of the key concerns in the ongoing tariff negotiations.

MITI Minister Tengku Zafrul Abdul Aziz has repeatedly said that Malaysia is committed to working closely with the United States to reach a mutually beneficial agreement, while firmly upholding national interests and sovereignty.

The ministry warned that any attempt to circumvent Malaysia’s export controls or participate in illicit trade will be met with strict legal consequences. Authorities have reiterated their commitment to upholding international norms and deterring the use of Malaysian jurisdiction for unauthorised technology flows.

The move reflects increasing global scrutiny of advanced semiconductor trade, particularly as Washington ramps up efforts to prevent sensitive technologies from reaching hostile actors. Countries such as the Netherlands, Japan and South Korea have similarly tightened export curbs on chipmaking equipment and materials.

“While Malaysia supports investments and trade aligned with international best practices and multilaterally agreed commitments, all entities operating in the country are expected to comply with relevant international obligations to avoid any secondary sanctions,” said the ministry.

US AI chips curb

According to earlier reports, the Trump administration is planning to impose export restrictions on AI chip shipments, including those from Nvidia, to Malaysia and Thailand, aiming to prevent these semiconductors from being diverted to China.

A draft rule from the Commerce Department is in the works to address the risks of transhipments, as part of a broader Trump-era overhaul of Biden-era AI export rules that were criticised as overly bureaucratic.

The Malaysian government has launched an investigation into reports that a Chinese firm may be using Nvidia-equipped servers in Malaysia to train large-language models – a case reflecting growing concern about indirect use of US chip technologies for foreign AI development.