Analysis: Tightening AI chip export control demonstrates Malaysia's firm stance
KUCHING (July 15, 2025): Malaysia will now require trade permits for the exports of high-performance US-origin artificial intelligence (AI) chips, which analysts perceive to be part of the government's aim to curb potential transhipment of these chips.
The move follows growing pressure from the US, which has effectively banned the sale of advanced AI chips to China since 2022.
Analysts with Public Investment Bank Bhd (PublicInvest Research) believed the new restriction may help close regulatory loopholes and prevent stricter legal action from the US government, which is considering new export restrictions on AI chips to Malaysia and Thailand.
'In our view, the enforcement of trade permits demonstrates Malaysia's firm stance against attempts to circumvent export controls or engage in illicit trade,' it said in its analysis yesterday, adding that this could ease the US concerns about the possible diversion of AI chips through intermediaries in Malaysia.
'Furthermore, it may reduce the risk of a US imposed AI chip export ban on Malaysia and Thailand. However, it could increase compliance burden on companies handling US-origin AI chips as well as the risk of delays.'
To note, Malaysia's Ministry of Investment, Trade and Industry announced that, effective immediately, any export, transhipment, or transit of high-performance US-origin AI chips will now require a government-issued trade permit.
The Ministry further emphasised that companies must notify the authorities at least 30 days in advance before the exporting or shipping of such items.
Additionally, companies must inform the authorities if they know or have reasonable grounds to suspect that the items will be misused or involved in illicit trading activities. It is worth noting that Malaysia exported US$16.2 billion worth of chips to the US in 2024, making up nearly 20 per cent of all US semiconductor imports.
'Generally, Malaysia does not fabricate these AI chips but these chips usually enter Malaysia for testing, packaging, assembling and re exported as part of the sub-systems like AI servers or AI hardware,' PublicInvest Research highlighted.
'Following this latest initiative, we believe there is a low risk of a US chip export restriction being imposed on Malaysia, which is positioned to become a data centre hub in Southeast Asia.
'Our channel checks indicate that five multi billion-ringgit data centre contract tenders from a US-based hyperscaler are expected to be launched in the coming months.' AI chips export Semiconductor
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