Malaysia’s Ministry of International Trade and Industry announced that a trade permit is now required for the export, transshipment, and transit of high-performance AI chips originating from the United States.

The regulation takes effect immediately.

Individuals or companies must notify authorities at least 30 days in advance for items not listed on Malaysia’s strategic items list.

The ministry said this move aims to address regulatory gaps as it considers adding these AI chips to the list.

It also warned of strict legal action against any attempts to bypass export controls or engage in illicit trade.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Malaysia’s strategic semiconductor position heightens its regulatory responsibilities

Malaysia has built a significant semiconductor industry over decades, evolving from a low-cost manufacturing base in the 1970s to become a sophisticated industry hub responsible for approximately 13% of the global semiconductor market share today.

The country exported $37 billion worth of semiconductors in 2024, with a substantial portion destined for China, making it a critical node in the global supply chain 1.

This position is bolstered by infrastructure advantages including 13 Free Industrial Zones and 12 Free Commercial Zones that allow tariff-free import of raw materials and equipment 2.

Malaysia’s ambitious goal to increase its global semiconductor market share to 15% by 2030 demonstrates its continued commitment to the industry, even as it implements stricter regulations 3.

The new permit requirements reflect Malaysia’s growing recognition that its significant position in the semiconductor trade brings increased responsibility for preventing illicit technology transfers.

2️⃣ U.S.-China tech rivalry puts Southeast Asian nations in a difficult regulatory position

Malaysia’s new permit requirements come amid reports that Chinese engineers have used Malaysian data centers to train AI models using Nvidia chips, potentially circumventing U.S. export controls 1.

This regulatory move follows U.S. plans to impose new restrictions specifically on AI chip exports to Malaysia and Thailand due to concerns about Chinese companies bypassing export bans 1.