Malaysia will require trade permits for U.S. AI chips

In a decisive move, Malaysia has stepped up its role in assisting the United States in preventing advanced AI chips from reaching China. The Malaysian Ministry of Investment, Trade and Industry announced on Monday that new regulations will now require individuals and companies to notify local authorities at least 30 days in advance before exporting or transshipping U.S.-origin AI chips. This initiative aims to strengthen export controls and combat illicit trade activities. The Ministry emphasized its commitment to preventing any circumvention of these controls, warning that violators of the Strategic Trade Act 2010 or related regulations will face severe legal repercussions. Concerns over the smuggling of U.S. AI chips into China have been increasingly highlighted, with reports emerging about sophisticated networks operating within China. In an April blog post, the AI company Anthropic suggested that smugglers have resorted to extreme tactics, such as using prosthetic baby bumps to conceal chips and shipping GPUs alongside live lobsters. In light of these developments, Anthropic advocated for more stringent export regulations to thwart such smuggling efforts. Meanwhile, reports from Bloomberg last week indicated that the Trump administration is considering further restrictions on AI chip exports from companies like Nvidia to Malaysia and Thailand, aiming to prevent China from accessing these vital technologies through alternative routes. Although no official announcement has been made, the U.S. Department of Commerce is also developing its own set of general AI chip export restrictions following the revocation of the Biden administration’s regulations earlier this year.