Malaysia verifying report of Chinese firm bypassing US tech curbs

Malaysia's government is verifying media reports that a Chinese company may be circumventing US export curbs on high-end AI chips by using servers housing Nvidia chips based in the Southeast Asian country.

The Wall Street Journal reported that Chinese engineers had flown to Malaysia in March carrying hard drives containing data to build artificial intelligence models in Malaysian data centres using advanced Nvidia chips.

The engineers planned to bring the AI models back to China, the report said.

The United States has cracked down on exports of advanced semiconductors to China, including those made by US tech giant Nvidia, as it seeks to retain a competitive edge over the technology.

A Malaysian trade ministry statement on Wednesday said it was "verifying the matter with relevant agencies if any domestic law or regulation has been breached".

The ministry said that while servers using Nvidia and AI chips are not classified as controlled goods under Malaysian law, the country "will cooperate with any government that requires assistance in monitoring trade in sensitive goods under the export control of their respective countries".

Data centres in Malaysia "are free to make their own commercial decisions", the statement said, but added that it was illegal for any person or firm to circumvent export controls.

The trade ministry said it "will always act firmly against any company operating in Malaysia, including those involved in semiconductor and AI industries, that violates Malaysian and international trading regulations".

Asked about the reports, Beijing insisted it required Chinese firms to operate according to local laws and regulations.

"At the same time, it opposes any act of coercing other countries to restrict their cooperation with China," foreign ministry spokesman Guo Jiakun told a regular press briefing.

"China is willing to work with countries in the region, including Malaysia, to jointly maintain a free and open international trade order," he added.

Singapore in March charged three men with fraud in cases reportedly linked to the transfer of AI-powering Nvidia chips to China.

The Singaporean government said servers potentially containing AI-powering Nvidia chips shipped from the United States to Singapore had ended up in Malaysia, but that their final destination was unknown.

Local media linked their cases to the alleged movement of Nvidia chips from Singapore for use by Chinese AI firm DeepSeek.

In January, DeepSeek released its R1 chatbot, shaking the global tech market and claiming its tool can match the capacity of top US AI products for a fraction of their costs.