According to the Financial Times, investment, trade and industry minister Tengku Zafrul Aziz said he had formed a task force with digital minister Gobind Singh Deo to tighten regulations on Malaysia’s expanding data centre industry, which relies heavily on chips by industry leader Nvidia.
The move follows demands from Washington for Malaysia to closely monitor the movement of advanced Nvidia chips entering the country, amid concerns that many are being redirected to China.
“(The US is) asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” Zafrul was quoted as saying in FT’s report.
“They want us to make sure that servers end up in the data centres that they’re supposed to and not suddenly move to another ship.”
The US is currently investigating whether DeepSeek, China’s open-source AI platform, bought advanced Nvidia semiconductors through third parties in Singapore, circumventing its restrictions.
Malaysia had been probing claims that servers potentially containing Nvidia-powered AI chips were transported from Singapore into the country.
However, Zafrul said the investigation found no evidence on the matter.
Earlier this month, Singapore prosecutors revealed in court that Singapore-based firms had allegedly engaged in fraudulent transactions involving the supply of US servers to Malaysia, reportedly involving US$390 million in transactions.
Singaporean media linked the case to a possible transfer of Nvidia’s AI chips to DeepSeek.
Zafrul also highlighted the difficulty of monitoring semiconductors due to the complexity of global supply chains, which involve multiple stakeholders including chipmakers, suppliers, buyers, and server manufacturers.
“The US is also putting a lot of pressure on its own companies to be responsible for making sure that they arrive at their rightful destination,” he said, adding that all parties across the supply chain were being urged to play a role.
“Enforcement might sound easy, but it’s not.”
Earlier this month, Singapore prosecutors revealed in court that Singapore-based firms had allegedly engaged in fraudulent transactions involving the supply of US servers to Malaysia, reportedly involving US$390 million in transactions.
Singaporean media linked the case to a possible transfer of Nvidia’s AI chips to DeepSeek.