US Urges Malaysia to Address “Trade Loopholes” Allowing Billions in NVIDIA AI Chips to Flow to China

Malaysia is initiating a crackdown on illicit “trade loopholes”that allow NVIDIA’s advanced AI chips to be transferred to China through unauthorized channels.

Efforts to Curb the Transfer of NVIDIA Chips to China: A U. S.Perspective

The current U. S.administration is making strides to tighten export controls, particularly on AI technologies, to prevent their flow into China. Although companies like NVIDIA are prohibited from directly exporting their high-end AI chips to the nation, these products have still found their way into Chinese markets through loopholes in U. S.trade policies. Among the identified pathways is Malaysia, which, according to The Financial Times, is now establishing a task force aimed at curtailing the illicit transfer of these AI technologies.

[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

Despite robust export restrictions, China has reportedly received considerable quantities of NVIDIA’s cutting-edge AI chips, significantly facilitated by nations like Singapore and Malaysia. These countries have been implicated in importing NVIDIA’s AI hardware before rerouting it to China, leading to transactions estimated at billions of dollars. Recently, law enforcement in Singapore apprehended three individuals connected to the sale of NVIDIA AI servers valued around $390 million destined for China.

In response to accusations regarding illegal chip sales to China, Malaysia’s Trade Minister has stated that there is no substantive evidence backing these claims. Notably, Malaysia is also a significant player in the AI investment landscape, having attracted up to $25 billion from global tech corporations for the development of its data centers—indicating a strong domestic demand for NVIDIA’s AI technology. Nonetheless, the country is under scrutiny for its involvement in the illicit trade with China, a situation currently under investigation.

Closing these loopholes could have a noticeable impact on NVIDIA’s revenue from data center operations. Countries such as Singapore contribute notably to AI server shipments, emphasizing the potential repercussions of stricter enforcement. While the future remains uncertain, it is clear that the U. S.is keen on ensuring that China does not surpass its advancements in the AI sector, employing stringent measures to safeguard its technological edge.

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