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Malaysia has moved swiftly to impose stricter oversight on the movement of high-performance artificial intelligence (AI) chips originating from the United States.
Effective immediately, exporters, transshippers, and transit handlers must obtain a Strategic Trade Permit and provide at least 30 days’ advance notice to Malaysian authorities for any related cross-border activity.
The new regulation, announced by Malaysia’s Ministry of Investment, Trade and Industry (MITI) on July 14, applies even to items not explicitly listed under the country’s Strategic Items List, signaling a broad tightening of oversight under the Strategic Trade Act (STA) 2010.
In an official statement, the ministry emphasized:
“Malaysia stands firm against any attempt to circumvent export controls or engage in illicit trade activities by any individual or company, who will face strict legal action if found violating the laws.”
The latest rule aims to “close regulatory gaps” as the government evaluates whether to officially include U.S.-origin high-performance AI chips under its strategic export control list, goods that may be used in the development of weapons of mass destruction (WMDs).
Response to U.S. Pressure and Tariff Hike
Malaysia’s policy shift follows mounting pressure from the United States, which has urged its partners to reinforce controls on AI chip exports that could be routed to China. The regulation also comes just days after U.S. President Donald Trump announced a 25% tariff on Malaysian exports, up from the previously declared 24%.
The White House also sent a formal letter to Malaysia’s King Sultan Ibrahim Iskandar and Prime Minister Anwar Ibrahim, outlining the tariff hike set to take effect from August 1.
Industry analysts suggest Malaysia’s new export rules may be an attempt to appease Washington and maintain healthy trade ties. The U.S. is Malaysia’s second-largest trading partner after China, and the top destination for its semiconductors and electronic goods. In 2024 alone, Malaysia recorded a US$24.8 billion trade surplus with the U.S.
Concerns over unauthorized technology transfers were heightened after reports emerged of computer servers shipped from Singapore to Malaysia, possibly containing Nvidia chips. These servers were reportedly linked to a fraud investigation in Singapore, raising alarms over possible re-routing of sensitive U.S. technology.
“This initiative serves to close regulatory gaps while Malaysia undertakes further review on the inclusion of high-performance AI (artificial intelligence) chips of US origin into the strategic item listing (SIL) of the STA 2010,” the ministry stated.
Global Supply Chain Impacts and Industry Response
Malaysia plays a key role in the global semiconductor supply chain. Its new permit system will affect major tech firms, including Nvidia. These AI chips now face added regulatory scrutiny. The new rules may lead to higher compliance costs, delays, and supply chain disruptions. This is especially true for companies that depend on Malaysia’s strategic location in Asia.
Authorities have reiterated that the policy aligns with international trade standards and aims to prevent unauthorized use of sensitive technologies, particularly those that could fuel dual-use military and civilian applications.
Experts say Malaysia’s move highlights the delicate balancing act between geopolitical alignment and economic preservation. The move meets U.S. demands for stricter AI chip controls. It also shows Malaysia’s effort to protect its global tech reputation. The country aims to stay compliant under rising international scrutiny.
Analysts warn that enforcement will be challenging, especially with dual-use items. Still, they agree the step is vital to stop Malaysia from becoming a backdoor in global tech trade.
