Malaysia Implements New Export Controls for U.S. AI Chips to Thwart China Smuggling Efforts

Malaysia is tightening its control over the export of advanced AI chips of U.S. origin, playing a crucial role in the broader effort to prevent these technologies from reaching China. On Monday, the Malaysian Ministry of Investment, Trade and Industry (MITI) announced new regulations requiring individuals and companies to notify Malaysian authorities at least 30 days in advance when exporting or transshipping U.S. AI chips. These restrictions took effect immediately. "The Malaysian government is committed to combating any attempts to circumvent export controls or engage in illicit trade activities. Any individual or company found violating the Strategic Trade Act 2010 or related laws will face strict legal action," the MITI stated in a press release. Recent months have seen multiple allegations of chip smuggling into China, highlighting the extent to which these advanced technologies are being sought after despite international restrictions. In April, Anthropic detailed sophisticated chip-smuggling networks in a blog post, claiming that smugglers were going to extreme lengths to transport AI chips, including hiding them in prosthetic baby bumps and shipping them alongside live lobsters. Anthropic's post advocated for stricter U.S. export controls to curb such activities, and it appears that these calls are gaining traction. Last week, Bloomberg reported that the Trump administration was planning additional restrictions on the export of AI chips from companies like Nvidia to countries like Malaysia and Thailand, aiming to close off alternative routes that China might use to access these technologies. However, an official announcement from the Trump administration has not yet been made. Meanwhile, the U.S. Department of Commerce is developing its own set of comprehensive AI chip export regulations. In May, the department formally rescinded the AI Diffusion rules introduced by the Biden administration, signaling a shift toward more stringent controls. These measures underscore the global urgency to regulate the distribution of advanced AI technologies, particularly in the context of growing tensions between the U.S. and China over semiconductor access and AI capabilities. Malaysia's new restrictions are a significant step in this direction, aligning the country with U.S. efforts to maintain technological leadership and security.