Tengku Zafrul said demand for AI chips has surged in Malaysia due to the country’s fast-growing data centre industry, which might have raised some red flags internationally.

“Our team has been working closely with the customs department, the Malaysian Communications and Multimedia Commission, the police, and industry players,” he told a press conference on the ministry’s second-quarter 2025 report card.

“We’ve also engaged with the US and major companies to ensure cooperation. If any evidence surfaces, we will take immediate action, but so far, there’s none.”

The ministry tightened rules on export this week for high-performance chips of US origin.

The move aims to close regulatory gaps while Malaysia undertakes a further review of the inclusion of high-performance AI chips of US origin on the strategic items list of the Strategic Trade Act 2010.

This followed reports that the US commerce department plans to stop China from getting Nvidia’s advanced AI chips by blocking shipments through third countries like Malaysia and Thailand.

Washington’s concern over the smuggling of AI chips into China grew in January, when it began investigating whether countries like Singapore were being used as transit points.

Attention turned to Malaysia after Singapore’s then home affairs and law minister K Shanmugam said on March 3 that the servers with Nvidia chips exported to Malaysia could have been meant for a different final destination.

Tengku Zafrul said at the time that local investigations found no evidence that they had arrived at the Malaysian data centre to which they were purportedly sold.