U.S. Pressures Malaysia Over Nvidia Chip Shipments Amid Smuggling Concerns

Malaysia is investigating potential violations in a server shipment supplied by the U.S., which may be linked to a recent $390 million Nvidia chip fraudulent case in Singapore.

For the U.S., the fraud case only continues to raise concerns about keeping American AI chips out of China, especially as the Trump administration tightens restrictions on exports to foreign adversaries.

Nvidia’s high-performance chips, including the H100 and A100, are banned from being sold to these countries. Even newer versions (A800 and H800) that Nvidia made in an attempt to bypass the regulations now face similar restrictions.

With pressure coming from D.C., Malaysian Trade Minister Zafrul Aziz confirmed that Malaysia is aware of the concerns and plans to address them.

“[The U.S. is] asking us to make sure that we monitor every shipment that comes to Malaysia when it involves Nvidia chips,” Aziz told Reuters. “They want us to make sure that servers end up in the data centers that they’re supposed to and not suddenly move to another ship.”

Malaysia is reportedly forming a task force led by Aziz and Digital Minister Gobind Singh Deo.

In early March, three individuals were charged in Singapore for allegedly smuggling $390 million worth of Nvidia chips by deceiving U.S. suppliers about their final destination.

The accused:

• Aaron Woon Guo Jie (Singaporean)
• Alan Wei Zhaolun (Singaporean)
• Li Miang (Chinese national)

A Singapore court granted the three suspects bail totaling more than 2 million Singapore dollars on March 13 and set “strict conditions” for their temporary release.

Malaysia is quickly expanding its tech sector, especially in recent years, as it’s drawn in major investments from Microsoft, Google, and Amazon Web Services.

Additionally, programs like the Green Lane Pathway and Malaysia Digital have been developed in recent years with the long-term goal of positioning Malaysia as a player in digital innovation and high-tech manufacturing.

The ultimate destination of these chips is unknown, although some speculate it’s China. The Nvidia chips were originally exported to Singapore but somehow ended up in Malaysia’s port.

Malaysia’s current regulatory gaps may welcome illicit activities. In addition to the recent news, 18% of Nvidia’s total reported revenue comes from Singapore invoicing, even though only 1-2% of shipments actually go there.

Does this suggest that buyers may be using countries with looser regulations or growing hubs to reroute banned technologies? That remains to be seen.