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The Star
08-07-2025
- Business
- The Star
Possibility of exemptions in US chip restriction rules
PETALING JAYA: RHB Research is maintaining its 'overweight' call on the construction sector despite US President Donald Trump's proposed plans to restrict shipments of artificial intelligence (AI) chips to Malaysia and Thailand, which could affect the construction of data centres. In a report to clients, the research house said, citing media reports, that one provision under the draft rule would allow firms headquartered in the United States and a few dozen friendly nations to continue shipping AI chips to both countries without seeking a licence for a few months after the rule is published. Gamuda Bhd , Sunway Construction Group Bhd and Binastra Corp Bhd are the research house's top stock picks in the constructions sector. RHB Research said despite the plans to restrict shipments, licence requirements would still include certain exemptions to prevent supply-chain disruptions. Therefore, US-based tech giants such as Google, Microsoft, Oracle, EdgeConneX and Amazon Web Services may continue their planned investments in Malaysia, which entail setting up data centres, the research house added. 'We also do not discount the possibility of some form of validated end user (VEU) status, similar to former US president Joe Biden's AI diffusion regulations, to be obtained by US tech giants and allies that enables them to ship AI chips more freely to countries like Malaysia, given their massive planned investments in the country. 'However, VEU status holders may also then be subject to stringent security requirements, such as supply chain security including personnel checking and transit security,' the research house said. It added that these 'friendly nations' may be countries previously listed under Tier 1 of the US AI diffusion rule put in place by the previous US administration. Some of the countries include Britain, the Netherlands, Australia and Japan. Key non-US data centre players currently expanding in Malaysia include Yondr, Vantage, AirTrunk and NextDC. It said there were some data centre tenders with outcomes expected to be known only over the July to September period. 'The tenders are related to the second phase of the Elmina Business Park, and Eco Business Park V at Puncak Alam. Based on our estimates, there could be a potential construction value worth RM7.4bil from the five data centre tenders, RHB Research said. It noted that key downside risks to its sector call include an unexpected slowdown in data centre builds in Malaysia from US-based developers.
Focus Malaysia
07-07-2025
- Business
- Focus Malaysia
Massive DC investments shield construction sector from AI export risks
RHB's top picks for the construction sector include Gamuda (GAM), Sunway Construction (SCGB) and Binastra. US President Donald Trump's administration via a draft rule plans to restrict shipments of artificial intelligence (AI) chips to Malaysia and Thailand. This is part of an effort to crack down on suspected activities of chips being smuggled into China. However, the rule is not yet finalised, and could still change. One provision under the draft rule would allow firms headquartered in the US and a few dozen friendly nations to continue shipping AI chips to both countries, without seeking a license, for a few months after the rule is published, according to media sources. The licence requirements would still include certain exemptions to prevent supply chain disruptions. Therefore, US-based tech giants such as Google, Microsoft, Oracle, EdgeConneX and Amazon Web Services may continue their planned investments in Malaysia, which entails data centre (DC) setups. We also do not discount the possibility of some form of validated end user (VEU) status (similar to former US president Joe Biden's AI diffusion rule) to be obtained by US tech giants and allies which enables them to ship AI chips more freely to countries like Malaysia, given their massive planned investments in the country. However, VEU status holders may also then be subject to stringent security requirements, eg supply chain security including personnel checking and transit security. These 'friendly nations' may be countries previously listed under Tier 1, under the US AI diffusion rule proposed by the previous US administration. Some of the countries include the UK, the Netherlands, Australia and Japan. Key non-US DC players currently expanding in Malaysia include Yondr, Vantage, AirTrunk and NextDC. GAM, SCGB and IJM mainly have their DC jobs coming from either US-based corporations, or DC players from countries that could be deemed as friendly by the US, in our view. In fact, the near-term DC job pipeline is dominated by US-backed MNCs. For instance, there are some DC tenders, with outcomes expected to be known over July-September. The said tenders are related to Elmina Business Park Phase 2, and Eco Business Park V at Puncak Alam. Based on our estimates, there could be a potential construction value worth MYR7.4bn from the five DC tenders. Other DC hotspots include Negeri Sembilan – one in Port Dickson via a 389- acre piece of land (acquired from GAM) developed by PCM and another plot in Nilai that is said to be backed by a US investor, according to the Chief Minister of Negeri Sembilan. The 389-acre land could likely house between 500MW and 700MW of DC capacity based on our analysis. Key downside risks to our sector call now include an unexpected slowdown in DC builds from US-based DC developers in Malaysia. —July 7, 2025 Main image: Freepik
