DC outlook intact for now
Sunway University economics professor Dr Yeah Kim Leng.
PETALING JAYA: There is a possibility that the firms involved in the alleged breach involving Nvidia-powered artificial intelligence (AI) chips may face US sanctions, but such measures are unlikely to be applied to Malaysia, says Sunway University economics professor Dr Yeah Kim Leng.
Yeah said this is given that many existing data centres (DCs) and those in the pipeline are US-based companies.
'Nvidia, a US company, is seeking new markets to offset its loss of China's market as the Chinese government has banned the use of its chips.
'China is accelerating development of home-grown AI chips, thereby offering an alternative supply unless companies that use them are also sanctioned by the United States,' he told StarBiz.
Yeah opined that despite the uncertainties caused by the technological rivalry between China and the United States, the outlook for DCs in Malaysia remained positive given the rising local and global demand for cloud and AI services.
'Malaysia will also benefit from the global firms' diversification of DCs that leveraged on each country's growth opportunities and cost advantages such as availability of cheap energy, land and skilled manpower resources,' he said.
According to a Wall Street Journal article, Chinese engineers reportedly flew to Malaysia in March with suitcases full of hard drives containing around 80 terabytes of data to train AI models at local DCs equipped with advanced Nvidia chips.
In addressing the alleged breach, the Investment, Trade and Industry Ministry (Miti) said, in a statement on Wednesday, it is in the process of verifying the matter with relevant agencies.
It reiterated that servers using Nvidia chips and AI chips are not classified as controlled goods under the Malaysian Strategic Trade Act 2010.
'Malaysia will cooperate with any government that requires assistance in monitoring trade in sensitive goods under the export control of their respective countries,' it said.
Given that the allegations were made in March, MIDF Research said it could be a move to 'speed up the process', before the eventually rescinded AI Diffusion Framework that was expected to come into force on May 15.
The research house is of the view that the pipeline of DC jobs in Malaysia is unlikely to be impacted by the alleged breach. It noted there is no slowdown or delay in ongoing projects and contractors are actively bidding for new DC construction jobs.
'Just last month, Gamuda Bhd sold 389 acres of land in Port Dickson to Google-linked Pearl Computing Malaysia Sdn Bhd and signed a RM1.01bil external infrastructure contract for enabling works for DC development, while Sunway Construction Group Bhd secured a RM1.16bil contract from a US tech giant to build two DCs,' MIDF Research said in a report yesterday.
Microsoft recently reaffirmed its commitment to a RM10.5bil investment in cloud and AI infrastructure in Malaysia, including the development of hyperscale DCs in the Klang Valley.
'We also reiterate that not all DCs are AI DCs and while most of them are AI-ready, they may eventually be utilised for non-AI purposes,' MIDF Research said.
It cited the example of YTL Power International Bhd which previously allocated 100MW for AI from its 500MW DC in Kulai, Johor.
iFAST Capital research analyst Kevin Khaw Khai Sheng said the long-term prospects of the country's DC sector remains 'quite intact'.
'Ultimately, Malaysia continues to benefit from several competitive advantages –such as abundant water resources for cooling, land, skilled labour and a relatively weak ringgit, which makes the country cost-effective,' he said.
Khaw added that, due to Singapore's limited access to such resources, he expected closer collaboration between Malaysia and the city-state.
Asked if the alleged breach would affect ongoing tariff negotiations between Malaysia and the United States, Khaw said it would unlikely be a decisive factor given that the country is already negotiating from a weaker footing.
'The alleged breach may add a bit more pressure to our position in negotiations. But ultimately, it depends on how our government handles the situation and works toward securing the best possible outcome.
'From the United States' perspective, Malaysia is not their major competitor. It is actively trying to diversify its supply chain risks – especially in light of tensions with China – and is looking for more allies and partnerships with other countries. Given Malaysia's 'neutral' stance and our geographical advantages, we could still be seen as a potential partner for the United States,' he said.
Khaw said the construction sector's outlook remained optimistic with the order book environment set to improve heading into the second half of 2025.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
40 minutes ago
- The Star
Reality behind a parade of power
RUSSIA celebrated the 80th anniversary of Nazi Germany's defeat last month with visiting heads of state and a show of armed might in Red Square, staged as a display of global clout, grandiose and intimidating, and a portent of eventual triumph in the war against Ukraine. The annual military parade below the walls and towers of the Kremlin was the largest since Russia invaded Ukraine in 2022, a commemoration the government and its cheerleaders used to raise support for the war, conflating what may be the greatest source of national pride with the far more divisive current conflict. 'Our great victory 80 years ago is a new narrative, a new conception of Russia's current standoff with the West,' Sergei Lyaguzin, an international relations professor, said on Russian state television. Behind the pomp, though, Russia stands on shakier ground than the Kremlin's confident show suggested. Its military is barely advancing on the battlefield, its economy is sputtering, prices for oil, its main export, are falling and, perhaps most surprising, US President Donald Trump is hinting that his view of Russian President Vladimir Putin and his war is souring. Putin has played down these challenges, accepting short-term economic pain and diplomatic setbacks in the hope that his persistence will eventually yield a triumph of historic proportions, said Alexander Kolyandr, a Russian economy expert at the Centre for European Policy Analysis, a research group. 'They are convinced that they are more resilient than their opponents,' he said. 'They believe that victory will not go to the side that is the best, but to the one that remains standing the longest.' After initially echoing Moscow's talking points – even falsely blaming Ukraine for the war – Trump has hardened his rhetoric about Putin and the Kremlin in recent weeks. Trump is threatening to punish the buyers of Russian oil, he is sending more advanced weapons to Ukraine and he has struck a mineral development deal with Ukraine that gives the United States a valuable stake in Ukraine's future security and prosperity. Russian forces have seized an average of 6.5 sq km a day over the past three months, according to calculations by a Finnish-based military intelligence firm, the Black Bird Group. At this pace it would take Russia years to conquer the regions that it has already claimed to annex. Rather than changing course, Putin has doubled down on his policies and demands. He has declined Trump's proposal to freeze the fighting along the current front line before starting to negotiate a peace deal, and has demanded that the United States get the European Union to lift some of its sanctions. At the same time, Russian forces have continued to pound Ukrainian cities, leading Trump to issue a rare rebuke of Putin. 'It makes me think that maybe he doesn't want to stop the war, he's just tapping me along, and has to be dealt with differently,' with additional sanctions, Trump wrote on his Truth Social platform. Despite such challenges, about a dozen heads of state were in Red Square for the celebrations, underscoring the Kremlin's claim that far-reaching Western sanctions have failed to isolate Russia. More than 130 pieces of military equipment, including intercontinental missile carriers, rolled through Moscow and soldiers from friendly nations marched with Russian troops, showing that Russia is not alone in what it presents as a proxy struggle against Nato. On the economic front, however, Russia is wounded and losing steam, pressured by falling oil prices, rapidly dwindling foreign currency reserves, record-high interest rates and the punitive sanctions imposed by the United States and its allies in response to the invasion of Ukraine. Russia has accepted a decision made last month by a group of major oil exporting countries, known as Opec+, to ramp up output, a move that has depressed oil prices already hit by the impact of Trump's tariffs. Falling oil revenue, which finances about 40% of Russia's government budget, is already hurting its war economy. The Russian finance ministry more than tripled the budget deficit forecast for this year to 1.7% of gross domestic product, and slashed its price forecast for its main type of exported oil from US$70 (RM299) per barrel to US$56 (RM239). Analysts estimate that to cover the rising deficit, the government would have to either spend its remaining rainy day stockpile of foreign reserves and gold, or print more money, which would worsen the already high inflation, now running at about 10%. The Kremlin considered, but then scrapped, a proposal to reduce public spending to compensate for declining oil prices. Putin has tolerated the central bank's policy of keeping interest rates at record highs in an attempt to dampen price increases. But a growing chorus of Russian officials and businesspeople has blamed the interest rates, kept at 21% since October, for wiping out growth without cooling prices, a lose-lose economic scenario known as stagflation. Russian consumers are grumbling about food prices, which rose at an annual rate of more than 12% in March, but these concerns have so far have not translated into broader dissatisfaction with the government, said Denis Volkov, head of Moscow-based independent pollster Levada Centre. Rising wages, government subsidies for the poor and decades of living with high inflation mean that in surveys conducted as recently as April more Russians say that their economic situation is improving, rather than worsening, he said. That political stability allowed Moscow to project national unity in the anniversary celebrations, despite the lack of major diplomatic or military breakthroughs in the war. Putin has regularly used Victory Day, Russia's main secular holiday, to convey that time is on his side. Russia's determination and size ground down Germany's Wehrmacht, Europe's military hegemon at the time, in World War II, goes the propaganda messaging, and Ukraine's Nato-supplied and trained forces will eventually follow suit. — ©2025 The New York Times Company This article originally appeared in The New York Times
The Sun
an hour ago
- The Sun
Deputy digital minister urges faster AI laws to combat fraud
SHAH ALAM: Deputy Digital Minister Datuk Wilson Ugak Kumbong has called for urgent legislation to regulate artificial intelligence (AI), citing its increasing misuse in fraudulent activities. He revealed that AI-related crimes have caused an estimated RM5 billion in global losses between 2020 and 2024. Speaking at the Gawai Kitai Ngiling Bidai 2025 celebration, Ugak stressed the need for stricter controls and penalties to deter AI misuse. 'I expect the AI legislation to be tabled this year so that we can tighten control and outline appropriate penalties for those who misuse this technology,' he said. The minister referenced recent incidents involving high-profile figures, including former Inspector-General of Police Tan Sri Acryl Sani Abdullah Sani and Johor Police Chief Datuk M Kumar S Muthuvelu. Both officials denied involvement in viral AI-generated videos depicting them receiving aid from an individual claiming to be a 'Datuk'. To combat such threats, the ministry is intensifying public awareness efforts through the Digital Malaysia Tour programme. Ugak noted his visits to Sabah, Kapit in Sarawak, and Penang to educate rural communities on AI fraud tactics. Digital Minister Gobind Singh Deo previously stated that a comprehensive report on AI regulations would be submitted by the end of June.
The Sun
2 hours ago
- The Sun
Malaysia deputy minister urges faster AI laws to combat fraud
SHAH ALAM: Deputy Digital Minister Datuk Wilson Ugak Kumbong has called for urgent legislation to regulate artificial intelligence (AI), citing its increasing misuse in fraudulent activities. He revealed that AI-related crimes have caused an estimated RM5 billion in global losses between 2020 and 2024. Speaking at the Gawai Kitai Ngiling Bidai 2025 celebration, Ugak stressed the need for stricter controls and penalties to deter AI misuse. 'I expect the AI legislation to be tabled this year so that we can tighten control and outline appropriate penalties for those who misuse this technology,' he said. The minister referenced recent incidents involving high-profile figures, including former Inspector-General of Police Tan Sri Acryl Sani Abdullah Sani and Johor Police Chief Datuk M Kumar S Muthuvelu. Both officials denied involvement in viral AI-generated videos depicting them receiving aid from an individual claiming to be a 'Datuk'. To combat such threats, the ministry is intensifying public awareness efforts through the Digital Malaysia Tour programme. Ugak noted his visits to Sabah, Kapit in Sarawak, and Penang to educate rural communities on AI fraud tactics. Digital Minister Gobind Singh Deo previously stated that a comprehensive report on AI regulations would be submitted by the end of June.
