Malaysia’s investigation reveals how complex supply chains can become loopholes in a high-stakes geopolitical battle – from security to market dominance.
Malaysia has launched an investigation into reports that high-end Nvidia AI chips – which were subject to stringent U.S. export controls – were allegedly transferred from Singapore and may have passed through Malaysian firms en route to China.
The case has triggered concerns about Malaysia’s role in the evolving global AI supply chain and its vulnerability to becoming a conduit in circumvention of international sanctions.
The probe was prompted by developments in Singapore, where three individuals were charged in a U.S. server fraud case involving Dell and Supermicro hardware.
It was alleged that these servers, were outfitted with restricted Nvidia H100 and A100 chips, and exported via Singapore to a company in Malaysia. Authorities are now investigating whether the exports continued to restricted destinations or remained within local borders.
“If there is any involvement of Malaysian companies, we will take necessary action,” Malaysia’s Trade Minister Tengku Zafrul Aziz said while speaking to news media.
Nvidia’s top-tier chips are under U.S. export restrictions due to their potential applications in military-grade systems and large-scale surveillance. Unauthorized redistribution not only undermines U.S. sanctions but also poses a broader challenge to the integrity of global technology governance.
The sharp rise in Nvidia imports—peaking at USD 2.74 billion in April 2025, according to customs data—has fueled suspicions that Malaysia may be emerging as a trans-shipment hub for restricted chips.
Malaysia’s Ministry of Investment, Trade and Industry has formed a special task force, jointly led by its Digital Ministry, to evaluate and strengthen its export control laws under the Strategic Trade Act. Several agencies—including customs, police, and the communications commission—are collaborating to audit shipments and company records.
While Malaysia conducts its internal review, coordination with Singapore and the U.S. is underway. Singapore, where Nvidia booked nearly a quarter of its global sales in Q3 2024 (primarily as invoice operations for multinationals), maintains that few chips physically pass through its territory.
Still, the legal loopholes exploited in this case—routing U.S. servers through shell companies—point to a deeper issue.
The U.S. government has reportedly pressed Malaysia to tighten controls and improve real-time monitoring of server and chip exports. U.S. authorities are also investigating reports that banned chips reached Chinese AI firm DeepSeek via third countries—allegedly involving Malaysia.
The Nvidia chip case underscores a growing trend: the entanglement of advanced technologies in geopolitical competition. AI chips are central to defence tech, R&D, and industrial manufacturing, making controlled access a strategic priority for US trade and foreign policy.
