Malaysia is set to impose stricter controls on the movement of Nvidia Corp.’s advanced semiconductors following requests from the United States, which has expressed concerns over the potential redirection of these chips to China, according to Malaysia’s trade minister.
Investment, Trade and Industry Minister Zafrul Abdul Aziz told the Financial Times that Washington has urged Malaysia to closely monitor the shipment of Nvidia chips to ensure they reach their intended destinations, particularly within the country’s growing data center sector.
“They want us to make sure that servers end up in the data centers they’re supposed to and not suddenly move to another ship,” he said.
The move comes amid an ongoing fraud investigation in Singapore involving the suspected illegal transfer of Nvidia-powered servers to Malaysia. Singaporean authorities have charged three men in a $390 million fraud case for allegedly misleading suppliers Dell Technologies Inc. and Super Micro Computer Inc. about the final users of the hardware.
The US has tightened export controls on semiconductors, particularly those used for artificial intelligence, as part of efforts to limit China’s access to critical technologies with potential military applications. Concerns have grown that Malaysia, a key hub for semiconductor supply chains, may be an unintended transit point for restricted chips entering China.
In response, Malaysia has formed a task force with Digital Minister Gobind Singh Deo to regulate its expanding data center industry, which has attracted more than $25 billion in investment from companies such as Nvidia, Microsoft, and ByteDance in recent years. The state of Johor, in particular, has emerged as a major hub for data infrastructure, further increasing scrutiny over chip flows.
Zafrul acknowledged the challenges of enforcing semiconductor regulations across complex global supply chains.
“The US is also putting a lot of pressure on their own companies to be responsible for making sure they arrive at their rightful destination,” he said. “Everybody’s been asked to play a role throughout the supply chain.”
While Malaysian authorities have yet to find direct evidence linking the Nvidia chips to unintended recipients in China, Zafrul reaffirmed the country’s commitment to improving oversight and compliance with international trade regulations.
With input from Bloomberg and the Financial Times.
