Washington urges closer monitoring amid fears Nvidia processors are being rerouted to China
Malaysia is set to increase controls on semiconductor shipments, especially involving Nvidia chips, after pressure from the United States over fears the components are being redirected to China in violation of export restrictions.
The US has imposed strict export controls on advanced semiconductors to block China’s access to technology that could be used for military or AI development. Malaysia, emerging as a data centre and chip logistics hub, is now in focus amid concerns of rerouting through Southeast Asia.
Malaysia Forms Task Force to Monitor Shipments
Trade Minister Tengku Zafrul Aziz confirmed that US authorities have requested Malaysia to track every Nvidia chip shipment, especially those entering local data centres. He has launched a task force with Digital Minister Gobind Singh Deo to regulate the rapidly expanding data infrastructure sector. The US aims to ensure high-performance chips destined for approved facilities aren’t rerouted to third-party nations like China.
Pressure Builds Amid Singapore Fraud Case
Scrutiny escalated following a high-profile fraud case in Singapore involving US$390 million (SGD 524 million) worth of servers allegedly routed to China via Malaysia. Singaporean authorities arrested nine people and have requested assistance from US and Malaysian counterparts. Nvidia processors, at the centre of the investigation, are widely used in AI development and are subject to export bans targeting Chinese firms.
Malaysia Emerges as Key Data Centre Player
Over the last 18 months, Malaysia—particularly Johor—has attracted over US$25 billion (RM118 billion) in investments from major tech firms like Nvidia, Microsoft, and ByteDance. Zafrul acknowledged the difficulty of monitoring supply chains, which involve multiple stakeholders across international borders. “Enforcement might sound easy, but it’s not,” he said, underscoring the complexity of global tech logistics.
Zafrul said the US has also urged American companies to ensure their hardware reaches only authorised destinations. “Everyone’s being asked to play a role throughout the supply chain,” he explained. Malaysia’s cooperation is seen as a key step in tightening global enforcement of semiconductor export policies, as Southeast Asia becomes a central transit point.
Malaysia’s commitment to tightening chip export oversight highlights growing geopolitical and trade tensions in the AI arms race. With regional players like Singapore and Malaysia under global scrutiny, their regulatory actions could shape the future of tech compliance and investment confidence across Southeast Asia.
Sources: Malay Mail (2025), Fortune (2025)
Keywords: Nvidia Malaysia Exports, Chip Export Controls, US China Tech War, Semiconductor Regulation
