NVIDIA’s $390 Million High-End AI Servers Found in Malaysia: Uncovering a US Export Restriction Loophole

In a surprising turn of events, authorities in Malaysia have allegedly uncovered a significant “trade loophole”involving the illicit transaction of NVIDIA AI servers valued at $390 million.

Malaysian Involvement in Fraudulent Transactions Featuring NVIDIA AI Servers

This development follows scrutiny over China’s rapid advancements in artificial intelligence, which has raised concerns about the nation’s methods of acquiring sophisticated AI hardware, particularly from industry leader NVIDIA. Investigations indicate that Singapore has served as a key entry point, facilitating the flow of high-tech equipment to China via third-party vendors, thereby circumventing U. S.export regulations.

According to a report from Reuters, entities within Malaysia have reportedly accessed high-performance AI clusters, with China’s DeepSeek allegedly utilizing this hardware. Singaporean prosecutors assert that local companies are implicated in the shipment of over $390 million worth of servers to Malaysia, leading to the indictment of three individuals for fraudulent activities.

The servers in question are believed to originate from respected manufacturers such as DELL and SMCI, both of which are significant partners of NVIDIA. Investigative efforts are now focusing on whether these parties misled server providers regarding the intended end-users of the equipment.

NVIDIA's Blackwell AI Servers Faced With Overheating & Glitching Issues; Major Customers, Including Microsoft & Google, Start Cutting Down Orders

This scenario emphasizes a troubling trend where advanced technology is being funneled to China through Southeast Asia, highlighting the apparent inefficacy of existing U. S.sanctions. Despite the illegality of such transactions, they represent a substantial portion of NVIDIA’s revenue; for instance, sales in Singapore have surged by an astonishing 740% in recent months due to major shipments involving Hopper accelerators and expansive AI systems.

China appears to be adept at securing computational resources, suggesting that it won’t be long before domestic firms gain access to NVIDIA’s upcoming Blackwell products. Furthermore, with Chinese companies like Huawei accelerating their development of proprietary solutions, it has become increasingly critical for Western nations to address these trade loopholes to safeguard their technological edge in the competitive landscape of hardware innovations.

Source & Images