Malaysia tightens rules on movement of U.S.-made AI chips

Malaysia has made it harder to import and export artificial intelligence (AI) chips that are made in the United States. The new rules were announced on Monday, July 14, 2025, by the Ministry of Investment, Trade, and Industry. This move is part of a wider effort to close loopholes in trade laws and to prevent the chips from being moved illegally, especially to countries under U.S. export restrictions.

From now on, companies will need a special permit if they want to bring U.S.-made AI chips into or out of Malaysia. The Malaysian government is tightening its control to make sure that these powerful chips do not end up being traded through illegal routes.

This change comes after recent concerns that countries like China were managing to bypass U.S. restrictions on advanced semiconductor chips. The Wall Street Journal had earlier reported in June that some Chinese firms were getting access to restricted U.S. technology by moving it through countries in Southeast Asia, including Malaysia. The U.S. government under former President Donald Trump had imposed strict trade controls on high-tech chip exports to China and other countries to prevent the misuse of American technology for military or surveillance purposes.

Malaysia wants to stay compliant

Malaysia’s action shows that it wants to follow global rules and avoid getting caught up in any illegal trade involving restricted technology. By tightening its regulations, the country also wants to protect its trade relationships, especially with the U.S., which is a major global power in technology.

According to officials, the goal is to ensure that all companies comply with international export laws and don’t use Malaysia as a stopover to avoid rules. The government is now requiring importers and exporters of AI chips to go through a permit system. Only those with proper permissions will be allowed to carry out such transactions.

The Malaysian ministry did not name specific companies or countries, but the timing of the move makes it clear that they are responding to global pressure to prevent the misuse of advanced AI chips. These chips are used in powerful computers, large-scale AI systems, and even in defense technology, so they are considered highly sensitive.

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By controlling the movement of these chips, Malaysia wants to ensure that it is not used as a middle point in trade networks that violate U.S. restrictions. In fact, the report by WSJ had shown that many Chinese companies were allegedly routing banned technology through third-party countries, making it difficult for U.S. regulators to track it.

Malaysia is one of Southeast Asia’s leading technology hubs. The country is home to many large tech companies and manufacturers, and it plays a key role in the global chip supply chain. However, being a central hub also brings responsibilities. Any misuse or weak enforcement can lead to trouble with trading partners like the U.S.

As global tensions around high-tech trade grow, Malaysia’s new policy could be an attempt to protect its image as a responsible and law-abiding player in the tech world. It may also want to avoid facing penalties or trade barriers from countries that fear illegal chip movement through Malaysia.

While the new policy could slow down some shipments in the short term, experts say it could benefit Malaysia in the long run. Stricter controls mean greater transparency, fewer risks of diplomatic issues, and stronger ties with countries like the U.S.

In the coming weeks, the Malaysian government is expected to issue more details about how the new permit system will work, how long approvals will take, and how companies can apply. Businesses dealing with AI chips will now need to prepare for stricter paperwork and extra checks.

This move reflects the increasing importance of AI technology in global politics and trade. As countries compete to control access to advanced chips and computing systems, even small regulatory changes in countries like Malaysia can have a large global impact.