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Malaysia Tightens Semiconductor Oversight to Address U.S. Concerns Over Nvidia Chip Diversion

The U.S. has urged Malaysia to monitor Nvidia chip shipments closely to prevent their illegal redirection to China in violation of export controls.

Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration/File Photo
Nvidia chips on display during the Taipei Computex expo in Taipei on May 29, 2023.
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Overview

  • Malaysia has formed a task force led by trade and digital ministers to strengthen regulations on semiconductor exports and its data center industry.
  • The U.S. has requested Malaysia to track every Nvidia chip shipment to ensure compliance with export controls and prevent diversion to unauthorized destinations, particularly China.
  • Singapore recently arrested nine individuals, with three charged in a $390 million fraud case involving the suspected illegal sale of Nvidia chips to China via Malaysia.
  • Malaysia has become a growing hub for data centers, attracting over $25 billion in investments from companies like Nvidia, Microsoft, and ByteDance in the past 18 months.
  • The U.S. export controls, introduced in late 2024, aim to limit China's access to advanced Nvidia GPUs, which could be used for AI and military applications.