KUALA LUMPUR (March 24): Malaysia is planning to tighten regulations on semiconductors under pressure from the US, the Financial Times reported citing Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Abdul Aziz.

Washington was demanding Malaysia closely track the movement of high-end Nvidia chips that enter the country over suspicions that many are ending up in China, in violation of US export rules, Zafrul was reported as saying in an interview with the newspaper.

“[The US is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” Zafrul was quoted as saying. “They want us to make sure that servers end up in the data centres that they are supposed to and not suddenly move to another ship.”

Zafrul’s remarks come on the heels of prosecution in Singapore against firms accused of fraudulently supplying US servers to Malaysia involving transactions worth US$390 million (RM1.7 billion). Singapore media reports have linked the case to Chinese artificial intelligence (AI) firm DeepSeek.

Singapore has charged three men over the alleged fraudulent movement of Nvidia chips and its Law and Home Affairs Minister K Shanmugam has said the servers in the fraud case may have contained Nvidia’s chips which were then sent to Malaysia.

US authorities believed the Nvidia chips ended up in China after passing through Malaysia, Zafrul was reported as saying by the Financial Times. However, Malaysia’s own investigation turned up no evidence that the chips arrived at the Malaysian data centre to which they were purportedly sold, he said.

Malaysia has largely dodged US trade restrictions aimed at curtailing the flow of advanced chips crucial for AI and data centres to China imposed by both the Biden and Trump administrations.

Zafrul stressed to the Financial Times the difficulty of tracking semiconductors through global supply chains, which involve chipmakers, suppliers and buyers as well as companies involved in manufacturing and distributing servers. “Enforcement might sound easy, but it’s not,” he said.

“The US is also putting a lot of pressure on their own companies to be responsible for making sure they arrive at their rightful destination,” he was quoted as saying. “Everybody’s been asked to play a role throughout the supply chain.”

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