(Bloomberg) – President Donald Trump’s administration plans to restrict the sending of artificial intelligence chips (AI) from companies such as Nvidia () to Malaysia and Thailand, as part of an effort to combat suspected semiconductors to China.
A preliminary rule of the Trade Department seeks to prevent China – to which the US has effectively banned – obtain these components through intermediaries in these two Southeast Asia countries, according to people familiar with the subject they preferred not to identify to discuss private conversations. The rule has not yet been finalized and may change, the sources said.
Authorities plan to combine controls for Malaysia and Thailand with the formal revocation of global restrictions on the so -called AI diffusion rule, the sources said. This milestone, implemented at the end of President Joe Biden’s term, generated objections from US allies and technology companies, including Nvidia. Washington would maintain restrictions on China-targeted semiconductors-imposed by 2022 and intensified several times-as well as over 40 other countries covered by a 2023 measure, which Biden officers have created to combat smuggling concerns and increase transparency in key markets.
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In total, regulation would represent the first formal step in Trump’s promised promised review of Biden’s AI AI approach – after the department of commerce announced in May that it would replace Biden’s rule with its own bold and inclusive strategy. But the preliminary measure is far from a complete replacement, the sources said. It does not respond, for example, to questions about safety conditions for the use of American data centers abroad – a highly important debate for the Middle East. It is unclear whether Trump’s officers can, in the future, regulate the sending of AI chips to a larger number of countries, besides the inclusion of Malaysia and Thailand.
The Trade Department did not respond to the request for comment. The agency offered few details about its regulatory vision beyond what Secretary Howard Lutnick told legislators last month: the US will “allow our allies to buy AI chips, as long as they are operated by an approved American date center, and that the cloud that accesses this date center is also operated by an approved American company,” he said during a congressional testimony.
Nvidia, the leading AI chip manufacturer, refused to comment, while representatives of Thai and Malay governments did not respond. Nvidia CEO Jensen Huang has previously stated that there is no “evidence” of AI chips deviation, in general statements that did not mention any specific country. In response to Bloomberg’s previous questions about smuggling risks, Thailand said it was awaiting details, while Malaysian’s Ministry of Investment, Trade and Industry said clear and consistent policies are essential to the technology sector.
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Trump employees plan to harden the smuggling of suspicious chips | Sale of AI chips to Malaysia and Thailand would require US approval under preliminary rule
Washington authorities have debated for years which countries should be able to import American AI chips – and under what conditions. On the one hand, and US policy makers want the world to build AI systems using American technology – before China offers a competitive alternative. On the other hand, since these semiconductors leave US territory and their allies, US officers fear that chips can somehow arrive in China, or that Chinese AI companies can benefit from remote access to the extinguishing date centers.
Southeast Asia is a central region. Companies like Oracle are aggressively investing in Data Centers in Malaysia, and commercial data show that chip shipments have fired in recent months. Under Washington pressure, Malaysian authorities promised to strictly oversee these imports, but the preliminary rule of the trade department indicates that the US still has concerns.
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Semiconductor sales to Malaysia are also the focus of a lawsuit in Singapore, neighboring country, where prosecutors have accused three men of defrauding customers about the final destination of AI servers – originally sent from the island to Malaysia – which may contain advanced Nvidia chips. (Nvidia is not the target of the investigation in Singapore and was not accused of any irregularity).
Export restrictions for Malaysia and Thailand would include various measures to relieve pressure on companies with significant operations in these countries, people said familiar with the issue. One of the provisions would allow companies based in the US and a few dozen allied countries to continue sending AI chips to both countries, without a license, for a few months after the rule was published, the sources said.
License requirements would also maintain certain exceptions to avoid supply chain interruptions, the sources said. Many semiconductor companies depend on Southeast Asian facilities for crucial manufacturing steps, such as packing – chip encapsulation process for use on devices.
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