US Plans To Restrict AI Chip Exports to Malaysia, Thailand To Curb Diversion to China

In a bid to curb semiconductor smuggling into China, the US government is considering restrictions on the export of AI chips, including those produced by Nvidia Corp. NVDA, to Malaysia and Thailand.

What Happened: According to a report, a draft rule from the Commerce Department is aimed at preventing China, which has been effectively barred from purchasing advanced AI processors from Nvidia, from acquiring these components through intermediaries in the two Southeast Asian countries.

The rule is still under consideration and may undergo changes.

The US officials plan to couple the controls on Malaysia and Thailand with a formal withdrawal of global restrictions from the so-called AI diffusion rule, which had faced resistance from US allies and tech companies, including Nvidia.

This proposed rule marks the first formal step in Trump’s promised overhaul of his predecessor’s AI diffusion approach, reports Bloomberg.

However, it does not provide a comprehensive replacement, leaving open questions about security conditions for the use of US chips in overseas data centers.

Also Read: Here’s Why China is Urging Its Companies to Forgo Nvidia’s Chips

The Commerce Department did not respond to a request for comment, and Nvidia declined to comment. The Thai and Malaysian governments also did not respond.

Why It Matters: The US has been grappling with the question of which countries should be allowed to import American AI chips and under what conditions.

The fear is that once these semiconductors leave American and allied shores, they could potentially end up in China or benefit Chinese AI companies via remote access to data centers outside China.

This move is part of a broader strategy to protect US technology and intellectual property from potential misuse.

Read Next

US-China Trade War: American Kids To Get Fewer, Costlier Dolls This Christmas, Here’s Why

Image: Shutterstock/Libin Jose