Malaysia probes alleged Nvidia chips moved from Singapore, vows ‘necessary action’ against local firms involved

KUALA LUMPUR: Malaysia will take “necessary action” against local companies if they are found to be involved in a fraud case involving the alleged movement of Nvidia’s artificial intelligence (AI) chips from Singapore to China, a minister said on Tuesday (Mar 4). 

“We are investigating (the case and this) involves the police, the customs, the MCMC (Malaysian Communications and Multimedia Commission) … we are in contact with our Singaporean counterparts,” Investment, Trade and Industry Minister Tengku Zafrul Abdul Aziz said in an interview with media company CNBC. 

“Definitely, if there (is) any involvement of Malaysian companies, we will take the necessary action.”

His comments follow that of Singapore’s Law and Home Affairs Minister K Shanmugam, who said on Monday that servers from United States firms Dell and Supermicro were sent to Singapore-based companies. 

The servers were then exported to Malaysia and likely contained items subject to export controls by the US, Shanmugam said.

The servers may have contained Nvidia chips, Shanmugam added. Whether they ended up in Malaysia, or another country, is being looked into, he said.

Singapore has contacted Malaysia and the US for more information, he added.

On Tuesday, Tengku Zafrul explained that the servers are usually imported by data centres. Major industry players in Malaysia include Microsoft, AWS and Google. 

“We have no information just yet that these companies, and the data centres they are operating in Malaysia, are not using the chips they are supposedly using,” he told CNBC.

His ministry said on Monday it will issue comments once it has obtained further details. 

CHIPS SUBJECT TO US' EXPORT RESTRICTIONS

AI chips from the American tech firm Nvidia are subject to US export restrictions as the US seeks to restrict China’s access to advanced chips for defence and other strategic purposes. 

After Chinese firm DeepSeek released its AI model in January, US authorities began investigating whether DeepSeek circumvented sanctions through third parties in countries like Malaysia, Singapore and the United Arab Emirates. 

Last month, Tengku Zafrul emphasised that Malaysia’s government takes seriously the allegation that the country is being used as a transit point for the smuggling of Nvidia chips to China.

Malaysia would not want any party to exploit its position as a semiconductor and regional logistics hub for illegal activities, he said, as reported by news outlet Bernama.

“We firmly adhere to export control regulations under the Strategic Trade Act, which governs the export, transit and transshipment of strategic goods, including semiconductors,” he said. 

To strengthen surveillance, Tengku Zafrul revealed that the Malaysian government is enhancing international cooperation to monitor the flow of sensitive technologies, such as Nvidia’s H100 and A100 chips used in high-performance AI applications. 

“Malaysia’s policy aligns with control measures implemented by the US, the European Union and the United Kingdom,” he was quoted as saying by Bernama.

CRUCIAL TO COMPLY WITH US’ REQUIREMENTS, SAYS INDUSTRY VETERAN

As is the case for Singapore, it is crucial for Malaysia to avoid being a transit point for AI chips ending up in China, Wong Siew Hai, president of the Malaysia Semiconductor Industry Association, told CNA.

“We need to comply as it is a requirement by the US government,” he said, adding that Malaysia is likely to adopt similar measures as Singapore in curbing any alleged smuggling. 

On Feb 27, Singapore charged three men with fraud in connection to the alleged movement of Nvidia chips. They are accused of misleading a supplier of servers on the end-user of the items. 

Shanmugam said on Monday that Singapore launched an independent investigation as a result of an anonymous tip-off, as it showed “potential breaches of domestic laws”. 

He said Singapore has asked Malaysia and US authorities to share relevant information to assist with investigations because the supply companies are linked to the US and, since the servers were sent to Malaysia, details of their movement within or beyond Malaysia fall under its jurisdiction. 

Ripples from the case have also affected a leading Malaysian electronics manufacturer. 

On Monday, Nationgate Holdings Bhd, a listed company that manufactures for Nvidia, denied any involvement in the case.  

The company said the fraud case in Singapore involved an Nvidia Cloud Partner that is not connected to Nationgate, following a query by Bursa Malaysia on unusual market activity in its shares. 

“We remain committed to transparency and compliance with all relevant regulations and will continue to monitor the situation closely,” the company said in a statement, as reported by the New Straits Times on Tuesday.