Malaysia is now starting its crackdown on the "trade loopholes," which involve the transfer of NVIDIA's high-end AI chips to China by illegal means.
NVIDIA's AI Chips Have Been Transferred To China Through The Likes of Malaysia; US Asks To Put an End To It
Well, it seems like the current US administration is determined to enforce its export restrictions, particularly involving AI hardware, to the likes of China. While firms like NVIDIA cannot export their high-end AI chips to China directly, they have somehow ended up in the nation, courtesy of the trade loopholes in the US policy, which we'll discuss ahead. One of the countries involved in this tech transfer is Malaysia, but according to The Financial Times, the nation is now taking action against it, devising a task force to monitor the transfer of NVIDIA chips.
[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips. They want us to make sure that servers end up in the data centres that they’re supposed to and not suddenly move to another ship.
- Trade Minister Zafrul Aziz
For those unaware, China has been getting access to NVIDIA's high-end AI chips in plentiful quantities despite the export restrictions, and that is mainly due to the involvement of nations like Singapore and Malaysia. These countries apparently import NVIDIA's high-end AI hardware and then transfer it to China through backdoor means, with the transactions claimed to be worth billions. Recently, three Singaporean individuals were caught selling NVIDIA's AI servers to China, with an estimated worth of $390 million.
Malaysia's minister claimed that while the US has accused them of selling chips to China, there is no evidence to support this statement. Moreover, the country itself is one of the biggest investors in AI and has reportedly received investments of up to $25 billion from major tech companies to build up data centers, so it is safe to say that Malaysia itself has a high demand for NVIDIA's AI chips. But the country is accused of being involved with China in illegal trade, but that is being investigated for now.
We all know that if these loopholes get patched, NVIDIA's DC revenue could see a hit, given that countries like Singapore account for a decent portion of AI server shipments. While nothing is certain for now, it is evident that the US doesn't want China to get ahead in the AI race, and they will implement every measure possible.
