KUALA LUMPUR – The Malaysian government has strongly rejected allegations that the country is being used as a transit point for smuggling Nvidia artificial intelligence (AI) chips to China.
Investment, Trade and Industry Minister, Datuk Seri Tengku Zafrul Abdul Aziz, has refuted the claims and clarified that Malaysia would not tolerate its position as a semiconductor and logistics hub being exploited for illegal activities.
The accusation which stemmed from he US Department of Commerce’s investigation has sparked international concern, especially following the rise of China’s DeepSeek AI company, which has gained attention for its advanced AI model requiring fewer resources than Nvidia chips.
In an interview on Bernama TV, Tengku Zafrul reaffirmed Malaysia’s commitment to adhering to multilateral international export control regulations, saying: “We firmly adhere to export control regulations under the Strategic Trade Act, which governs the export, transit, and transhipment of strategic goods, including semiconductors.”
The minister also emphasised that Malaysia’s policy aligns with global export control measures, including those set by the United States, European Union, and the United Kingdom and the government remains committed to upholding the integrity of its semiconductor sector in line with international trade laws.
Malaysia, Tengku Zafrul noted, is actively strengthening international cooperation to monitor sensitive technologies, such as Nvidia’s H100 and A100 chips, often used in high-performance AI applications.
The allegation against Malaysia comes in the wake of DeepSeek’s rapid rise in the AI sector. The Chinese tech firm recently launched an AI model that boasts a much lower operational cost and computing power requirement compared to Nvidia’s offerings, creating significant ripples in the tech industry.
DeepSeek’s model, which has been heralded for its efficiency, quickly became the most downloaded app on Apple’s App Store, intensifying concerns in the United States regarding its competitive position in AI.
According to Reuters, the US Commerce Department is reportedly investigating whether DeepSeek used Nvidia chips that are restricted from export to China. The smuggling of these AI chips has allegedly been traced back to countries such as Malaysia, Singapore, and the UAE. However, the extent of Malaysia’s alleged involvement remains unclear.
Singapore’s Trade and Industry Ministry also responded to the allegations, referencing Nvidia’s statement, which confirmed that no evidence had been found to suggest DeepSeek obtained export-controlled products from Singapore.
The Singaporean government reaffirmed its commitment to upholding the law, stating that any breach of export control regulations would be met with decisive actions.
Malaysia’s AI development
Aside from addressing the smuggling allegations, Tengku Zafrul took the opportunity to highlight Malaysia’s increasing focus on AI and semiconductor development. He noted that the success of DeepSeek demonstrates that AI technology is no longer monopolised by a few major companies like Microsoft, OpenAI, and Google.
The rise of China’s AI capabilities has proven that more nations, including China and potentially India or the EU, can contribute to the global AI landscape.
“Technological advancements like DeepSeek have a positive impact, making AI more inclusive and accessible to more users. If AI can operate at a lower cost, more businesses, including small and medium enterprises (SMEs), can leverage it to boost productivity.”
To maintain its competitive edge, Malaysia is placing a greater emphasis on research and development in AI and semiconductors. Tengku Zafrul underscored that the government is fostering innovation within Malaysia’s local industries, with a focus on integrated circuit design and wafer manufacturing, which remain underdeveloped compared to assembly and testing activities.
The Malaysian government is actively addressing the brain drain, particularly the migration of skilled professionals to countries like Singapore, the US, China, and Taiwan. To curb this, He announced that the government is working to attract more technology companies to create high-quality jobs and help make Malaysia a leader in innovation.
The minister also reaffirmed Malaysia’s long-term vision of establishing a thriving AI ecosystem, which would empower local businesses and micro-enterprises, ensuring the benefits of AI technology extend throughout the economy.
He stressed the importance of a comprehensive approach to national development, where the goal is not just to be a producer of labour but a leader in the global technology and innovation sectors. – February 7, 2025