Audit companies that import high-end chips, says former deputy minister

A former deputy minister has urged stronger government measures to stop high-end AI chips from being moved from Malaysia to China, by conducting audits of firms suspected of forwarding such components via Singapore. Ong Kian Ming, who served as deputy minister for international trade and investment, suggested the ministry could verify the number of premium graphics processing units imported from Singapore and the count installed in local servers.

"It shouldn't be too hard to scrutinize companies believed to be forwarding these chips," he stated on the Keluar Sekejap podcast. Tighter enforcement would bolster confidence in the US that Malaysia is taking steps to prevent such transshipments, he added. The discussion centered on rumors of Nvidia chips possibly being re-exported by Speedmatrix Sdn Bhd, a Malaysian subsidiary of Singapore's cloud computing company Megaspeed International.

The government has indicated readiness to aid an investigation into Speedmatrix if a formal request is made, though none has been submitted yet. The Strategic Trade Act 2010 governs the export, transshipment, and transit of strategic items, including sensitive technology and materials that could be utilized in terrorism, nuclear proliferation, and weapons of mass destruction.

In July 2022, the Malaysian Investment and Development Corporation began mandating strategic trade permits for the export, transshipment, and transit of high-performance AI chips made in the United States. Ong cautioned that if the US enacts a new law regulating remote, cloud-based access to restricted technology, demand for Nvidia chips could plummet significantly.

This could affect data centers already running in Malaysia and those planned for construction. Muda deputy president Zaidel Baharuddin noted that Malaysian entities that have established facilities using cloud-based services might also face challenges if the AI bubble bursts.